Deflation poses new economic threat

May be the last days of capitalism. How about that for doom and gloom.

The last day of Capitalism, oh please yes!

I am beyond words after reading this article.  I've feared that our country has been on the wrong path for the last 10 years and now it's coming home to roost.  I look at the mess that has been created around me and cannot help but feel trapped.  I am pissed off that my future was sold for a quick buck.  My biggest fear was that I would become a slave.  Now look at all the poor folks who can no longer retire, or stay retired for that matter.

Actually, deflation is more scary for big business. It would only benefit me at this point, because I have no debt, but I understand that a lot of people do have debt. MN Nick you used the words "coming home to roost", those are exactly the words I thought of while I was reading  this story. Really, though deflation is a big slap on the wrist for big business, and after their greedy and immoral behavior, condoned and often encouraged by the administration (and administrations in the past), congress (and congress in the past), and the Fed, they deserve a slap on the wrist, and a slap in the face.

This is just a bunch of propaganda ment to scare people. 

I remember one professor in college - many many many years ago ... stating that the concept of deflation was the biggest scam on the public ever.. it was the last refuge for the bureaucrat to hide behind when all of their policies failed.... In this case .. we are just scaring the public - or as another theory holds - creating a "state of fear" to explain why they were justified.

The truth .. we are NO LONGER a capitalist country - the second that government loaned money to private industry (by perpetuating a fraud no less = to help the "little guy on his home foreclosure") ... they destroyed any chance of a self correcting economy.

Stop lending our money to big business - let them self correct and from the ashes a phoenix will be born... otherwise - you are just bleeding us to death slowly by putting a band aide on a bazooka hole!

Business is definitely the biggest loser if deflation takes hold.  Especially those that have to deal with unions.  The unions have a contract for "x" amount of wages and benefits.  If the product they make and sell goes down in price in an attempt to move it, the revenue the company makes for each product goes down. That means you can't re-invest for improvements or re-tooling for customer demand (like the auto industry needs to do).

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Deflation is NOT a problem.  The Federal Reserve has been inflating prices for decades by overprinting money to the point that the USD is worth only 4% of what it was worth in 1913. Inflation is a TAX--make no mistake about it.

We need a HUGE correction--not more price fixing--in order to get back to truly FREE markets.  If that takes irresponsible corporations down with it, so be it.  When an entrepreneur creates a business, he/she takes all risk and reward.  Taking all risk away from massive corporations is not only unfair, it is Fascist. 

Henry Paulson, for example, has a revolving door with the Federal Reserve and Goldman Sachs. After leaving Goldman Sachs and becoming Treasury Secretary of the Federal Reserve, he gave massive amounts of money to international banks when they made high-risk, irresponsible "business" choices.  This causes UNNECESSARY inflation and the US taxpayer foots the bill--a double stab.

Watch Paulson go back to work for Goldman Sachs when he is done lining their pockets at our expense.

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http://www.wsws.org/articles/2008/sep2008/paul-s23.shtml

http://www.opensecrets.org/revolving/rev_summary.php?id=70162

Take your time read this and then tell me if you think this is the most moronic article you have read for awhile.

I knew it wouldn't be long before we started getting the scare articles about deflation. For average working people, deflation is nothing to be feared. For the wealthy and those who invest in the stock market, it does have some negative consequences. But in the long run deflation is much better than rampant inflation which brings sky high prices. (Anybody still want to pay $4.00 a gallon for gasoline?) In a free market economy, you are always going to have either inflation or deflation to some degree. "Chicken Little" articles like this one serve absolutely no purpose except to alarm people needlessly.

  It's hard...way hard to watch and wait for the market to correct itself but it must Tricky part is watching the jobless market explode even more. No jobs, no consuming. No consuming, less jobs...bad spiral . A whole lot of hurt. The brighter side really may be repairing the infrastructure. That will give jobs even though it will be the government paying the wages, but it will increase consuming on the other hand. People with soft hands will have to get in the ditch with everyone else and learn ahard lesson. Foreclosures, bankruptcy of people and business's are bad now but I see it as getting only worse. Called over extending.

Stop The NWO Now - Paulson admitted under oath that inflation is tax upon the public. Since it's inception in 1913 the Federal Reserve and governmental interference has played havoc with the economy. The Federal Reserve is a private banking cartel. It is no more federal than Federal Express. This cartel is made of the same banks the "bailout" was engineered to help.

To restore a healthy economy we need to start with the following:

End the Fed Reserve

Stop governmental manipulation of the markets

Restore our currency to the gold standard

Maybe then we can see some change.

Agree 100% with spreadex.  It has been a long time since I have read an article this stupid, and this poorly written.  What's worse is that it's written under the guise of expertise.  Good lord.

Some grade A retarded morons in this thread.  Deflation hurts the RICH?  The rich have piles of money and can sit on their money indefinitely, which they will do as they have done in every deflatinary cycle going back to the 1870's.  And the TRUE middle class, professionals, middle management, burocrats, etc... will muddle thru as long as they can hang on to their jobs.  The other 75-80% of working class Americans are screwed, as they have been in every deflationary cycle.  They don't have nearly enough money to wait it out, their jobs will be sacrificed to make sure the top 20% don't suffer too much pain, and the at least until this election the government did the bidding of the rich.  And, if the idiots here who think they 'can wait it out' because they have no debt, do you have SIX YEARS of money to live off if you lose your job or pension?  Six years is the average length of a deflatinary cycle since the 1830's.

This writer is a jerk-off.  There is no "bad" news to report, so lets fabricate some!  Falling prices only make me want to buy, and continue to buy. 

If price go up, the sky is falling; if prices drop, the sky is falling! 

How about msn stops printing rediculous articles aimed to generate "clicks" and the fickle mob will start buying again.  Paying less for something today than I could have yesterday has never hurt anyones feelings. 

paul-547058:  Yes, I know the "Federal" Reserve is anything but Federal.  This video spells it out quite well: http://video.google.com/videoplay?docid=6507136891691870450

spreadex: Understand something: the mass media (including this article) are simply propaganda machines for the shadow elite.  Rockefeller thanked the mass media for its participation in keeping secret the New World Order agenda: http://edschultz.invisionzone.com/index.php?showtopic=32123

while Deflation is a momentary issue, the longer term issue because of the underlying structural defects in our economy will lead, over the next 18 months to Inflation sky-rocketing and double-digit unemployment. Best bet is get out of stock market and put your money in low yielding investments but that are safe.

We STRONGLY recommend that you do not buy into the stick market at this point as the big players will make it impossible to make a sound judgement to what to invest in. Stay on the sidelines and wait.

Stop The NWO Now - go to endthefed.us. There are rallies tomorrow in 39 cities around the country to protest the Fed Reserve. The rally is being held on the anniversary of JFK's death. Ironic how 2 weeks before his death he signed an executive order abolishing the FR.

Deflation-- What a load of C--P !   We have seen about 20% or more inflation in the general retail market in the past year.  Now that most of us have cut back on using gasoline and helped bring down the price of fuel costs, someone Group out there in the government wants to yell DEFLATION !

Yah-Right !!  I have some swamp land in Florida that I want to sell !  All markets will correct themselves if allowed to do it.  The car companies are in trouble, because of a lack of vision by their CEOs.  They kept producing Gas-Hogs when the public was switching over to fuel efficient vehicles.   Result: A total collapse of sales on those models that do not measure up.

The government is bailing out the financial industry instead of forcing them to continue to correct their losses.  The housing industry needs to correct itself by deflating the 60% or so bubble created in the past 7-8 years.  (Painful Yes- Necessary Yes !)

Should qualified owners be allowed to refinance their loans at acceptable rates and not be forced into foreclosure ?  Yes, if they can qualify. 

Should CEOs who deceived the public and their clients illegally stand trial for any Fraud or other illegal activities ?  Yes, if they also qualify !

Our Country/Government should not be for sale to the highest bidder !  All of us need to be reminded that this Country was and is established by WE THE PEOPLE.   We need to force the government to stop bailing out everybody for the bad decisions that are being made !  especially by Industry !

Have Faith in this Country and Support our Country's Principles !

This type of price cutting is very normal during a recession, and is a welcome change for the vast majority of Americans.

most people dont know that we already owe 20 percent of money to the fed so out of every dollar we only get 80cent because the money we get is loaned to us by the FED and lets get this straight the fed is the biggest fraud ever its whats keeping us slaves to the dollar wonder why all of a sudden it takes two or three incomes just to run one home when prior to the 70's how many women had to go out and work when they had a husband who was working, somewhere along the line we started paying way to much for everything and our wages stop growing with the economy lets get rid of the FED and stop the slavery

I don not think we are doomed at this point.  Sometimes it is good to shake things up a bit before they fall into place.  Lower gas prices are a good thing right now but unemployment is on the rise so I guess I will just wait and see where this goes next

This article says deflation could be bad for a recovering economy.  Well that may be true but what economy does the author see that is recovering?  So far, it appears that no one in charge--Paulson, Bush, Pelosi, Reid or the soon to be power assuming Obama seem to be paying attention to the fact the economy is GOING DOWN THE TUBESs.  What televison are these people watching, newspapers are they reading if they think they con't have to do something?  Maybe if I could afford some ear plugs and blinders I too would be going along as though life is peachy.

Just like I said in a previous post:

Washington is trying to support the infrastructure with tooth picks and the most expensive (not necessarily the most effective) coating $$ can buy in the form of a bailout.

You can put as many coats of paint on a house you want, but if wood is rotten, it needs to be replaced. This is true of Washington and our financial sector. REPLACE 'EM!

Another way I see it.

A forest needs to burn in order for the "new" to grow. Washington is telling us the old trees are fine even thou they cannot bare any new seeds, put out that fire before its started. They are smothering and killing off the baby trees so that the old are the only ones standing.

Washington, Wall Street, your trees are rotting, you have no seeds to plant new ones because you killed them off. NO MONEY IN THE WORLD can make new trees without seeds. - they have killed and smothered all new businesses just like the seed producing trees, And this bailout is just nutrients for the old trees (businesses) that keep the world (economy) from growing healthy. Desert

This article doesn't take into consideration that we are in a global economy. If prices go down enough then we will have attractive products to foreigns.

So what is the bad news? Prices are going back to normal? Everything is so over inflated now to make the most profit. Out of control greed has caused our major problems. Oh "Boo Hoo!"

THIS ARTICLE IS ABSOLUTELY STUPID!!!!!!!!!!!

Sherry Taylor

So far, it appears that no one in charge--Paulson, Bush, Pelosi, Reid or the soon to be power assuming Obama seem to be paying attention to the fact the economy is GOING DOWN THE TUBESs.

They are definitely paying attention. Unfortunately there is nothing they can do to prevent it. The "bailouts" and other fiscal bungling amount to rearranging the deck chairs on the Titanic. Fed chairman Ben Bernanke apparently thinks that reciting incantations from the Book of Greenspan will do the trick. They won't work either.

Prudent individuals are best served by preparing their own affairs for hard times and expecting no help from the government as the screws continue to tighten. You might find this article of mine on that topic to be interesting.

I didn't find the article to be a scare tactic, as for true devaluation to occur it must be for an extended period of time.  Japan experienced this is the 1990's, and many economists call it Japan's lost decade.  Inflation/devalution often occur in the economy and most eventually self-correct.  However, if we do enter true devaluation, it becomes everyone's concern.  As a consumer, I love price-slashing.  But over a period of time, a business simply can't cut prices any lower and still stay in business.  That would mean more lay-offs, businesses going under, and even further cuts in consumer spending, as more and more people lose jobs.  I truly hope we don't enter into devaluation.  But to me, it seems as if our government is clueless on how to handle our current economic crisis.

This article is neither stupid nor meant to frighten as some of the commenters here have opined. Deflation is real, it is not a scam by the government, and in a "deflationary spiral" everyone feels the pinch.

People confuse "inflation" with rising prices, and "deflation" with falling prices. It's not the prices themselves, but rather the supply of money and credit that matters. Rising prices are effects of inflation because the availability of more money and credit drives them higher. Similarly falling prices are effects of deflation because there's less spending power available to support high prices so sellers must lower prices to make their sales.

The current "credit crunch" is clear evidence then of deflation, as the supply of credit has begun to contract. Cash is king during deflationary times, and those who have managed to hang onto it will be the best off.

Jazz-525054

I didn't find the article to be a scare tactic, as for true devaluation to occur it must be for an extended period of time.  Japan experienced this is the 1990's, and many economists call it Japan's lost decade.  Inflation/devalution often occur in the economy and most eventually self-correct.  However, if we do enter true devaluation, it becomes everyone's concern.  As a consumer, I love price-slashing.  But over a period of time, a business simply can't cut prices any lower and still stay in business.  That would mean more lay-offs, businesses going under, and even further cuts in consumer spending, as more and more people lose jobs.  I truly hope we don't enter into devaluation.  But to me, it seems as if our government is clueless on how to handle our current economic crisis.

rickace

This article is neither stupid nor meant to frighten as some of the commenters here have opined. Deflation is real, it is not a scam by the government, and in a "deflationary spiral" everyone feels the pinch.

People confuse "inflation" with rising prices, and "deflation" with falling prices. It's not the prices themselves, but rather the supply of money and credit that matters. Rising prices are effects of inflation because the availability of more money and credit drives them higher. Similarly falling prices are effects of deflation because there's less spending power available to support high prices so sellers must lower prices to make their sales.

The current "credit crunch" is clear evidence then of deflation, as the supply of credit has begun to contract. Cash is king during deflationary times, and those who have managed to hang onto it will be the best off.

Thanks for a very good comment on this subject. Sadly most of the commenters above are doing a knee jerk reaction to this subject. Apparently you have some knowledge about this subject and a clearer head. While it sounds GREAT about falling prices, I do find it a bit scary. We just had a discussion today about the price of gasoline. My question was, if gas goes to say $10 a barrel, is there a point where it becomes 'unhealth' for the economy ?? Some answers were, it means no new exploration, auto factories go back to building huge SUV's, no more building eco-friendly autos, local service stations closing by the thousands. Apparently deflation has some scary / bad reactions. Thanks for a clearer view, on what may happen.

SCARY STUFF, EH.   Michael   

Psssttt.  The financial industry is putting away $25 Billion of our money in reserves - each. 

American business is scared because China and other countries want their money--like little loan sharks. 

Now that they have ripped off the American people, put them out of work, and robbed them of their health -- they are begging us to bail them out of the mess they've made.  The problem is, we don't have any money to help them with. 

Let the oil companies bail out the auto industry--they are the ones to put them in this position to begin with.

Let the insurance companies and 'for profit health care' companies pay for clean water initiatives.

This is just another ploy by the Republican controlled administration, business and media.  They are so scared they might have to 'play by the rules', stop ripping off the American Worker and make a wage less than $10 Million a year. 

Not really. Inflation and deflation are both bad. The difference is who gets affected first. With inflation, there is an increase in the supply of money (credit) and therefore people increase their spending thus increasing demand. Businesses then increase their prices on goods (partly out of keeping up with demand, and partly out of greed). What then happens is that prices eventually goes up to the point where people begin to not be able to afford the goods because their paychecks has failed to keep pace with the rising cost of goods while business owners have merely pocketed the profits (did not pass earnings on to the workers). Demand then decreases, and then businesses are forced to layoff workers, close factories, or declare bankruptcy all together. When the businesses suffers, then more people loose their jobs and needless to say, the economy suffers as a whole.

Regarding deflation, the shoe is reversed. In a deflationary economy, there is too little money (credit) in the economy. This causes low consumer spending so businesses are forced to reduce their prices or go out of business. Though the consumers are happy that prices are reduced and therefore start spending again, if prices continue to fall (which I doubt will happen- I will soon explain why), then the business runs into the problem of meeting their revenue targets to keep their doors open (or have very little financial incentive to do so). Businesses will then layoff workers, close factories, or even declare bankruptcy. These actions affect the American people because they are the ones who work in these businesses and if they can't work then they lose, and then again the entire American economy suffers. Remember there are laborers who work at Best buy for example, as well as lawyers, computer technicians, accountants, Battery Maker companies, Rhapsody, etc. If Best Buy fails, we all fail.

To conclude, inflation and deflation both hurt the economy. The only difference is that inflation tends to hurt the American people first and the businesses last, while deflation tends to hurt the businesses first and the people last.

However, the greater of the two evils by far is inflation. Inflation when it happens, is definite to have an affect on the people and then the businesses, while deflation is not guaranteed to have disastrous effects. Why? Because businesses are to savvy and care too much about their bottom line. When prices begin to fall and consumer spending increases, they will steadily increase the prices, and consumer spending will steadily tighten. The pattern will repeat, thus becoming cyclical. This cycle is how American economy is supposed to work because it keeps us in balance. Currently we are not in balance. The same will tend not to happen with inflation, because as stated, the people affected first is the people- the consumers. If they are first affected, there may be nothing to stand on when times "get better" and the businesses, then the economy will ultimately suffer. I agree with all who posted that deflation, in reality is not a real threat, because unlike the common man, businesses are way to savvy to let themselves loose. The times we are in now is an extreme, and ultimately the businesses are going to have to pay for what they have done to the American people.     

The last days of Capitalism - SUPER, GREAT, KUDOS....  maybe now the rich will stop getting richer and poor poorer....  Capitalism has failed so many times over because of GREED...

Never will we erase GREED from mankind.  Therefore - Socialism - its the only thing to do to protect the masses from becoming slave labor...

Devils.Advocate:

Um, no.  We've already tried that (in Cuba and the former Soviet Union). It failed.  Try something else...like Austrian school economics.

Deflation is a problem. Any significant changes to the financial system are very serious. Runaway inflation that we have seen (and was hidden) for the last 10 years caused many problems.

Deflation is a problem for two reasons:

1. FINANCIAL INSTITUTIONS CANNOT SURVIVE PROLONGED DEFLATION: when prices drop, demand declines (cause you will get it cheaper next week), generally incomes drop (along with employment rising) - debts stay the same. people can't make payments, negative equity in everything, bankruptcy - the "reserve" banking system fails - and voila we have the "Great Depression". The 700B is a drop in the bucket - virtually every bank / investment bank will fail without government intervention.

2. DEFLATION IS A CONTRACTION OF ECONOMIC ACTIVITY. Having no debt won't help you - no one will buy anything, because they are worried about the "economy" and then they will loose their jobs, houses, etc. Banks will fail, and their savings will disappear .... Great Depression.

The problem is that we need deflation of some prices (housing/Fuel) to bring the economy back into equilibrium. We also need wages to rise. The problem is that without more government intravention, the so called "free market" will do the opposite. As unemployment rises, wages will drop - a key factor in deflation - further reducing demand, and causing more deflation. The only way to stop this is likely a form of wage and price controls which would stabalize prices .... and a significant change in how the financial system operates going forward.  Lets not forget, they CAUSED ALL OF THIS MESS - AND SO FAR OTHER THAN A 700B PAYDAY they haven't had much explaining to do.

I doubt that anyone will make the moves required to stave off deflation here. That would be a real experiment in socialism, and open a whole Pandora's Box. Otherwise lets just hope that the "fiscal" stimulus plans are inflationary enough to fight it off!

The problem is that without more government intravention, the so called "free market" will do the opposite.

Government tampering with the private sector only makes things worse. Fannie and Freddie are two recent examples.

I doubt that anyone will make the moves required to stave off deflation here.

Don't let Ben Bernanke blow smoke up your tailpipe. The government is powerless to stave off deflation.

Otherwise lets just hope that the "fiscal" stimulus plans are inflationary enough to fight it off!

They won't be. They will however saddle us with more debt, a bad thing to have in a deflationary environment.

I'm not so sure a Global Depression wouldn't be good for the long run. It could teach people the value of money, how fortunate they are to have a job, not to look to the government for all the answers, That just because they get a degree that should automatically be paid $100,000 a year to start, that family values mean more than anything else,  that our politicians are complete idiots and the list could on and on! There would be a lot of good that comes out of the suffering!

Well our farm just paid off all credit accounts, and guess what fools?

We had a new tractor financed which would have paid itself off within 4 yrs easily, well until the creditor decided to lower the CLI (that raises your utilized credit, and lowers your credit score thus most likely screwing up your other accounts).

After paying off equipment we will probably not have start up money next year, hope you plan on growing a garden because I bet we are not the only ones!

On the bright side we will eat good!

The logic for letting the global economy go into a depression sounds good. Only problem is: The legislators and bank CEOs and financial gurus are the only ones who have enough cash to make it through. Once again, the ones who will suffer for those guys' mistakes (that really is spelled 'GREED') are us, the middle class.  There has got to be a way to fix this problem without making the middle class (and lower class?) the sacrificial goat!

We can sit at our laptops and gripe in this column, or colectively try to come up with a solution that's "viable", as congress puts it, and try to get it up for consideration.

I suggest using the rest of the $700B bailout for a massive stimulus package, both for industry and the people, to try and get come working capital back into the hands of those who need it.

I agree with limiting CEO's pay and bonuses, but I don't agree with firing them.  They have Golden Parachutes already in their contracts, so they already have a "get out of jail, free" card. Make them stay, and set their salary (no bonuses until the company is in the black) based on NET profit, not revenues.

Take this and run with it.

The only reason gas is down is due to the election and all of the talk about going "green";  the UIA said Whoa Nelly (equilivent in our language), I digrees, sorry.  So they have reduced the price of gas, once we become complacent again and are not so focused on going green the UIA will raise those prices again and slap us right on the ass, YES AGAIN.  It's all about greed, all of this, greed, and more greed.  We pay overprice for everything, we are taxed on taxes, they should all be rich, we, the middle class are the only ones who are hurting, who should be hurting, what the heck, the rich will survive a depression, a recession, whatever session you want to call it, the only people who are going to be hurt in this mess is us.

Uncommonsense: "Global" depression...okay I'll go for that BUT it so far it's USA that's in the tank for the most part.  Global would give us time to repair and maintain our position of world power....but there is Russia for example staring us down that can fast forward their position.  I"ll admit, even though I'm in a relativley stable position right now, all of really know that could end at any time. Glad the house, autos etc.  is paid for!

We are being bombarded with "deflation is bad" Propaganda. If a person on the news is saying deflation is bad you know they do not have the American interests at heart. Stop listening to this propaganda media. Its not a free media.

Let them eat cake, I guess.

Maybe it's time to stop believing ever scare tactic that the press uses. They tried to stress us out when gas prices and everything else was through the roof, but we kept shopping. Now prices are dropping, and we're still shopping. Personally, I have not seen people pulling back on the way they spend very much at all.

But why is our media (who is in bed with the government) trying to scare us about everything under the sun? .... "The world is a mess because of global warming, and we are destroying 'Mother Earth'! The world is a mess because of global cooling, and we are destroying 'Mother Earth'! AIG is crumbling and needs a bailout! The banking industry in failing and needs a bail out! The housing market is crumbling and needs a bailout! Gas prices are on the rise, which is very 'bad'! Gas prices are dropping, which is very 'bad'! Food prices are on the rise! aaaaaahhh  Food prices are falling! aaaaaaaaahhhh!!!! Run for the hills! The sky is falling!!!!"

What is the purpose for our society to be completely stressed out? Anybody figuring this out yet? Could it be that our government wants more control? If they get the public stressed out enough, we will freely give, or even demand that they take control of everything!

What is the best thing you can do? Stop reading their propaganda so much, and especially, STOP believing it!

Go enjoy life, and stop reading their crap! Go throw the baseball with your sons. Go play house with your daughters. Take the family sledding or camping. Go enjoy your lives!

i agreee totally well said

Mr. X is dead on! the next great crisis will be FOOD as FARMERS will not be able to buy seed, plant or harvest. Buy lots of rice and beans folks!

so, if no farmers can "afford seed"..........what then happens to the price of seed?.....

it goes down until people can afford it...........and dont give me this crap about food, they are more concerned about the dropping price of corn on account of less ethenol demand

All I read on these posts is how PEOPLE are looking to the government to HELP THEM.

Most PEOPLE are NOT on WELFARE.  They are NOT looking for a handout.  WE go to work every day, we pay our bills, buy the insurance, don't buy houses above our means etc etc etc etc etc.

However, it is difficult to tell the kids to get a college education when their parent's lives (both who have a college degree), is getting harder and harder. We should not be living paycheck to paycheck.  We should be able to save something which we are not.

ALL we want is for government NOT TO HURT US!!!  All we have seen is government on the side of insurance companies, on the side of oil companies, on the side of the financial district, on their own power crazed side. 

Once again, it will be the Middle Class who holds this country together while the rich just complain while holding onto their money, the Congress gives more to the poor who already have more than we do, and the insurance companies continue to screw us all.

I'm tired of all of these so-called conservatives complaining 'the rest of us are living beyond our means' while they put our retirement into a RISK, GAMBLING adventure called the Stock Market.  It isn't INVESTMENT - IT IS RISK.  There is a reason they call it risk, there shouldn't be a guarantee to the fat cats - just retirement accounts.  They knew it was risky and now they cry foul.

WE are just trying to make it and be a good role model to our kids and live.  Stop making it harder than it should be!

I went for a hike yesterday. It was so peaceful. It was wonderful to leave the stresses of life behind me and just enjoy the moment.

What good does any worrying do for us, especially when it is completely out of our control? All we are doing is feeding our stress.

Turn your computer off or put down the newspaper .... and Get out and enjoy life...

Have a wonderful day!

Most posters here are missing the point. Deflation is not the problem. Why would any sane person be sorry to see prices go down, unless it means that his income would go down with it!! Not everybody is locked into a wage contract, and even in a case like that, workers have volunteered to take a pay cut before now to save a company from going under.

The  people who will suffer are the people who will be forced to slash prices so that they can make back some portion of their inventory costs. Some people and firms will have to do that over and over again. Slashing prices doesn't merely mean less profit, it also means slashing costs, and the greatest cost of course, is wages. So you fire your expert and you don't rehire to cover the ones that leave. Instead you bring in a stock boy to fill the shelves and a young geek fresh out of college to run the computer room. There's less business so you don't really need the extra manpower. But the economy loses the purchasing power of the five senior staff the two youngsters have replaced, so the deflation spirals down another notch.

No deflation is NOT the problem. The problem is the situation that caused the deflation in the first place. Deflation happens when people are broke, I stated in another discussion somewhere. More accurately, not just broke, too broke! The suggestion there is that it doesn't happen all at once. First you're too broke to buy luxury items, then too broke to buy a new car, then too broke to travel by automobile, then too broke to pay the mortgage, does that sound familiar?

The government can inflate us out of it. My grocery bill has already doubled over the last nine months, and that was just my contribution to the cost of the war! The cost of the bail-outs haven't even begun to hit us yet. For the present, we need to pray that inflation continues to inch its way up, thanks to government spending. (because) ... If the sale prices that we're going to see in December remain in place after January, we're in for a fast ride down to the bottom, and I don't think even the most liberal spender we've ever seen in the White House is going to have the gumption or the power to do the kind of spending we'll need to get out the other side.

Yes, for some industries we are already in a depression. Housing and travel are the leading edge of the depression. Hopefully the oil prices are a special case and do not truly reflect the ability of the consumer to travel. Housing is for sure, in a deflationary spiral that's going to last for a long while. These are two bubbles that have already burst, let's hope the government has the expertise to make sure that the malaise doesn't spread to other industries. Let's  hope Obama has the will to put the money he intends to spend where it will do most good, in the hands of the consumer, not Wall Street, nor in the hands of those spoiled out of touch moguls with their private jets and sense of wealth entitlement.

PFB

At least Obama can say he wasn't the one responsible for the Great Calamity which was brought about by the dumbest jackass we've ever had in office!

Bush suggests policy. Congress passes the laws. The past two years were Democratic. Put the blame where it belongs-- the Democrats are at fault for the economic mess we are in.

None of these happened in the last two years. This has been roughly four decades in the making. All that are still attempting to blame Obama and the "Democratic" congress are blinded by their inane love of the Republicons.

Piglizard:

All who think that this mess was the sole product of Republi"con"s, who rammed everything down our throats with the "noble" Democrats fighting them every step of the way, are naive.  Both political parties have looked to their own interests and used events to their own advantage, as they always have and will do, and the interests of our country and it's people be damned.

Put a hold on that B-735...Remember, the Dems held "sort" of a majority. They were stopped on all corners by Republicans.

Didn't take too long for someone to bring about an OBAMA comment now did it? How about you negative nonsense spouters wait and see what the next 4 years bring - and try to help a little? Too much to ask? Thought so!

And if you think this mess started in the last 2 years when the veto king still could ride herd over congress .. well then I have a pipline for you to invest in Alaska.. Lord knows that never was more than a political speech also ... 2 YEARS? Wow ... now that has some credible substance... (holding sarcasm sign)

at least give the man 100 days in office to say he is doing more of the same.... even if he is picking the same run of the mill people lets wait to pass judgement and remember that i know its a poor analogy but lets look at sports sometimes a change at the helm does alot for the chemistry of the team so once losers are now Winners same players different leadership

And the previous six years were under the total control of which party and administration?

B-735389

It was like a game of tug-o-war, with your Bushy as the ref. Now tell me he played a fair game!? The ref....he won the winning tug. Whos to blame????

tommy,

The other party couldn't wait to start in on Obama. I guess they realized if they didn't start before the inauguration, the American people might have time to think and conclude that Bush (aka jackass, moron, idiot, fool, etc) Inc, was responsible. They wouldn't want that now would they lest the American people get the idea that one should never vote for a Republican again?

To all people supporting political parties: CAN IT.

What we are going through has been going on since at least Clinton, possibly earlier, was in office.

The Democrats have been constantly complaining since 2000 how Bush "Stole" the election, ignoring the fact that they were checking barely marked chads to try and see "voter intent" to vote for Gore. Plus, that election military ballots were NOT counted because they supposedly were not marked properly or "after due date" (I doubt this).

When they got into power here, it's been spend, spend, spend, and blame Bush for everything - in spite of the fact that Bush can only suggest things, not actually get his will done - Congress votes for the stuff to attempt to become law.

If you wish to blame the bailout - blame most of the Democratic party and some of the Republican party on it. In case people haven't paid attention, there is a $25 million PORK barrel project set aside for the car industry to create a fuel efficient/environmentally friendly car. Given that they are currently about to fall, I don't think they should worry about using that money for that but for liquidy.

But - the Democrats want to carve out $25 million from the "bailout" and use it on TOP of the $25 million already set aside. That's NOT what is needed - and the Republicans see it, remembering how the recession of the 1980s eventually righted itself up.

So, yes, the Republicans spend, but let's be frank here - the Democrats spend even MORE than the Republicans. And - quit bashing Bush - every president has had good and bad things happen. I even admit that Clinton did some good in his tenure, and Bush bad.

*****************************

Now, you want to really blame people for the current standards - blame those who ran up more credit than they could afford to pay off. They constantly go into default and what do they do? - sign up for another card to spend.

If we'd get people to pay off their credit - even if it takes years - then we'd see an increase.

OH, and Banks need to REALLY stop going to colleges and doing card signups there. It's usually where the credit card debt starts - because college kids' salaries are usually quite small, and they don't think they have to pay off anything.

(This is why I'm thankful that I was taught a. how to only spend within my means, i.e. if I can't afford it, I don't buy it, b. a free T-shirt is not worth risking getting into debt (college  sign-ups for credit) and c. I pay off what credit I do owe each month, but I only use my card for gas and emergencies (the latter only once in my time - and I still paid off my entire credit card bill for the month. ;) )

Mel - here's a thought for you

Dems = tax and spend

Repubs = borrow spend

The size of government continues to grow with each administration. BOTH parties are at fault. For all of you continue to blame the other party - check your facts before spewing ignorant babble.

Oh, I should also say - I don't blame Obama for anything yet. He's not president, but I am very wary of some of his proposals, given they will put us further into debt. I also question:

1.  As far as his presidency himself, why did he get a court order to seal his  birth record? Could he possibly be ineligible to be president and he doesn't want anyone to know?

2. As far as the "National Health Care," most countries I know that have that either a. have to wait  months for procedures, meaning they come here to get them done where there's no waiting and b. most states here it's the LAW you must treat someone who comes in, and if they're indignant, you still must treat them.

Unfortunately, there's c. some people will refuse to buy health insurance when they know that they're in the Medicaid standards, meaning they'll get services on our tax dollars. I know of one fellow - who made more than me, but yes was under those requirements, who said he didn't bother getting health insurance because the state would pay for it. Well his wife  became pregnant, so she had everything paid for on mine and others' tax dollars.

What is needed is reasonable health insurance, and on a few cases - people need to get jobs that actually get insurance, not wait for handouts.

3. The "starting increasing tax" levels he has predicted will drop from $250,000 to about $49,000 (middle income). So much for his promises. The only ones who will probably get lucky are the lower classes, but not much.

4. His proposal to let the tax cuts Bush implemented expire in 2010 will affect ALL levels. Sorry, it doesn't JUST benefit the  rich.

Look, I hope I'm so wrong with this and Obama does make some good policies, but with a Democratically controlled Congress (BTW - only 56 seats, not 58 - don't count Independents automatically as Democrats), if they constantly spend, people will say "Enough!" and you might see a Republican controlled Congress again and a Lame-Duck president in Obama.

Caution is in order with what lies ahead, but I don't fault Obama yet - save the question as to why he got a court order to have his birth certificate sealed. We need to know if he's eligible or not to be president.

Mel - here's a thought for you

Dems = tax and spend

Repubs = borrow spend

The size of government continues to grow with each administration. BOTH parties are at fault. For all of you continue to blame the other party - check your facts before spewing ignorant babble.

****************************

No sir, I fault both parties - always have. I am just sick and tired of all the current publicity going on about Change when there will be more of the same. But, people are clearly blaming Bush when in fact, you must blame the Democrats in Congress too for our current situation. People are only pointing their fingers at Bush, thinking he makes the  bills. Only ones who can are Congress, Bush signs them into law.

Sorry, but I read several stories during this election about making sure the elections were "fair," and referring to the "scandal" of the 2000 election. The Dems have constantly decried - even eight years later - that Bush was not legally elected. I didn't believe for a moment Gore's proposal of doing an entire state recount in Florida he's accept the results. His face lied in spades.

Look, I fault Bush for many things, but if people think the Dems won't tax us more and spend it on pork barrel projects (i.e. the fuel efficient car idea, bridge to no where) - especially when the $700M bailout when to actually $800M with the pork barrel projects included (passed by a Democratically controlled Congress with yes some Republicans supporting it), they're mistaken and misinformed.

It is so amazing to see opinions, tantamount to nonsense in my opinion,  like Mel spouts.. YES .. both parties are to blame... but he forgets that if BUSH did not like any act - he held FULL VETO power for ALL 8 years in office - and used it often .. or then again could circumvent any law by using his "signing authority" ...

So you're saying "can it" for those talking politics and YOU immediately started the blame game on party yourself?  Repubs this go around have blown our lives right out of the water over "BUSHES" war. Not our war but Bushes. Nobody had any choice but to fall n line whether they liked it or not...NOTICE WHOSE IN THE WHITEHOUSE NOW??SPEAKS VOLUMES. 

Dems have spent their money on trying to help not hinder. Notice the Repubs are having a fit now because they (Dems)want a business plan and strings attached to the Big3 loan? No sweetheart deals for them. Shouldn't have been with the lending institutions etc.

Paying off credit sounds all good and sound but have you not realized the current practice the credit card company's are engaging in? They cut your credit limit...which unknowingly puts the holder over their limit. They also have and are increasing their interest rates without advising their customer that they have. No way in hell can most get past that. I pay double on my cards and on time to pay them back to get out of this mess responsibly but guess what happened to me? Same thing. Why? Because of the inflated prices out of control...I had to live on my credit cards just to  get back and forth to work.

Whats even more amazing is these same banks - taking the handouts - charge upwards of 18% on credit card debt and we should now subsidize them? If I ran my business this way - we would be on welfare .. no one really understands that bailing out the big boys does not help in any way the small business ... just helps the big boys continue in their unprofitable ways for another couple year?~

: For starters, please do not be rude and call people names. All it does is make you look foolish, and proves my point. You do not want to read the facts of history - or frankly pay attention to the world around you. I also support the better candidate, and based on policies, I felt McCain was the better one - he at least TOLD us how he planned on implementing his plans. Obama simply put never did, though IMHO both parties could've done better this election.

In case you haven't noticed, this is the TRUE history. In the past 30 years we've had two Democratic and three Republican presidents. Reagan's programs in the 1980s actually REVERSED a recession - I should know, I lived it. What did he do? - kept taxes low and helped increase consumer confidence.

After all, people spending is what makes profit for companies, which increases stocks. Simple economics 101 for you there. Democrats are historically known for increasing taxes and spending it unwisely.

The Dow first hit 10K during Clinton's era, and he also tried to  get peace between Israel and Afghanistan. He failed the latter.

Congress over the past 30 years - even longer, have created pork barrel projects.  These are projects that are unnecessary, but add to our national debt and our taxes. Congressional bills are also public record, so you can easily read up on it if you don't believe me.

And - given that the recount a few years later in Florida STILL showed Bush as the winner, Gore did try to steal the election and they were mad that the Supreme Court, seeing this was happening said "STOP."

Um, I'm actually quite knowledgeable in the case of history. What I listed is clear - and I see it every day. In case you haven't seen the news over the past three years, you have Hurricane Katrina victims SUING FEMA to keep their housing. That housing is temporary, and they should've been looking or had jobs now. They just do not want to work, knowing the government will help them out. I know several who do choose Medicaid because they just don't want to pay for the health insurance. Right now, I qualify for it, but I do not use it because I don't think it's right.

Tom - Maybe you need to read your history books. The democrats controlled congress and the presidency during the Great Depression. By manipulating the markets and implementing numerous "social" programs, it took a decade and finally a war to end the depression while the rest of the world came out of it in 5 years or less.

You should also check out the facts about how much damge to the economy the democrats have caused over the years. No party is perfect. All of them are out to do whatever is in their best interest. Closed minded people like you seem to think that shouting the loudest makes your viewpoints correct.

Look into the Council on Foreign Relations and the Federal Reserve to start with. Minds are like parachutes, they function only when open.

It is so amazing to see opinions, tantamount to nonsense in my opinion,  like Mel spouts.. YES .. both parties are to blame... but he forgets that if BUSH did not like any act - he held FULL VETO power for ALL 8 years in office - and used it often .. or then again could circumvent any law by using his "signing authority" ...
************
No, I actually fault Bush for a few things. He should've gotten us out of this current war sooner than he did, and not said that it was "mission accomplished" when it wasn't.
And, line item veto - which Clinton had for a time - was declared unconstitutional by the Supreme Court, so he has no choice to go full veto. It would be interesting to see what could've been if he only got to line item as well. We might've actually had some stronger bills pass and  less of a squabble between congress and president.

And, executive orders as they're called - Obama will have this too, and will use it to reverse Bush's orders. He will also be able to use them for things he wishes to circumvent if he so chooses.

meneither123: So you're saying "can it" for those talking politics and YOU immediately started the blame game on party yourself?  Repubs this go around have blown our lives right out of the water over "BUSHES" war. Not our war but Bushes. Nobody had any choice but to fall n line whether they liked it or not...NOTICE WHOSE IN THE WHITEHOUSE NOW??SPEAKS VOLUMES. 

********************

I apologize for the obvious contradiction in my claim, but my point was it goes both ways. I am tired of seeing the Democrats saying Bush stole the election in 2000 as much as I am Republicans decrying Obama before he's even president. Yes, I do have some serious reservations on him I've seen come to light, but hopefully I am wrong. I do support the president, even if I do not agree with him - always have and will. But, I think both sides just need to can it with the "Bush stinks" and "Obamanation" comments.

Point of fact - past six large wars, the Democrats entered us into Four, including the hated Vietnam. And, when Nixon (Republican) removed the troops from there, it became Communist. Don't think for a moment that this wouldn't happen if we removed troops too soon.

Also, out of the four Democratic wars, we entered only one for legit reasons - WWII. WWI we wanted to remain neutral but were asked to help, Korea we were forced into by UN (which a Dem president = Wilson - got us into) to do a "Police Action." Result - they're at a stalemate, still technically under war as only a cease-fire was signed, and Vietnam, we were asked by the South Vietnamese to help out. When Vietnam became unpopular and we had all the protesting going on here, all the North did was wait because Congress and the president would eventually kowtow to the will of the people and have our troops leave.

I'm not saying either Bush war was needed, but the second one wouldn't have happened if Bush Sr. made sure Saddam was defeated (i.e. he left too soon).

******************

Dems have spent their money on trying to help not hinder. Notice the Repubs are having a fit now because they (Dems)want a business plan and strings attached to the Big3 loan? No sweetheart deals for them. Shouldn't have been with the lending institutions etc.

************************

No - there are too many pork barrel projects they institute, which are wastes of taxpayer money. Both these bailouts - or at least the one we're seeing now - they are NOT being used the way they were supposed to be - to buy assets and open up more credit. That is harming our economy.

And, recent news, people from both sides are working together on a plan to get a plan done where both sides are happy, so if nothing else, there are more people actually realizing they need to work together to make sure the Big 3 have to use this money right, i.e. not give it to unions or corporate (which BTW, Chrysler or whoever supposedly was to write bonuses to people but were asking for money, should rescind those promises - hey happens everywhere - and use that money for liquidy too).

******************

Paying off credit sounds all good and sound but have you not realized the current practice the credit card company's are engaging in? They cut your credit limit...which unknowingly puts the holder over their limit. They also have and are increasing their interest rates without advising their customer that they have. No way in hell can most get past that. I pay double on my cards and on time to pay them back to get out of this mess responsibly but guess what happened to me? Same thing. Why? Because of the inflated prices out of control...I had to live on my credit cards just to  get back and forth to work.

**************************

By law, they are supposed to put that in your bills or give you notice. You can contact the Federal Trade Commission for that issue. Unfortunately, they also can get away with it by putting it in fine print, as I found out when AT&T raised rates on Internet. They put it in the "News' section of the bill the month prior that they were going to do that. Sounds bad - and it is, but that's how some of it comes down.

The raising interest rates gets me though - most cases they are raised the moment someone makes a late bill. My case, I had one that was late by two days and my rates jumped slightly. But, I also only use the card for emergencies and gas, and when I don't need them, I use either a check or cash so I don't risk the interest rates.

mel your concerns may be legitimate but again please let him hold the office first before youmake wild accusations you sound like my girlfriend who is always saying im doing something before she has all the facts. point one he has not taken office point 2 he is not the president point three spreading doubt instead of hope sounds like more republican nonsense point 4 he is willing to invest in the country with his spending wants to bring PRODUCTION back to America so really where is the problem at i dont see BUSH or the REPUBLICANS talking anything about the Future of our country OH how could i forget NO CHILD LEFT BEHIND and i know most politician lie but i was told you cant lump everyone together in one categorey would you like to be called an undercover bigot hate mangering racists because you voted for Mccain so please lets give him the chance to make the mistake before condemning him to fail

Wilson got us into Korea?  Wow talk about a time warp.

Actually we got into WWI because the Germans kept sinking our ships because greedy American businessmen couldn't sit back and not try to make money off the war by selling war materials to England and France.

Vietnam was more correctly started by Eisenhower who pretty much supported the French to the tune of 80% of their occupation budget.  He sent plenty of 'advisors' to try and bloster the French's failed attempt to hold on to their corrupt regime in Indochina.

If one of the other wars you are referring to was Bosnia I am not sure now you could not say it was not a sucess.  The genocide was stopped and the countries involved rose from the ashes of war in relatively rapid time. 

you should have just stuck to the first line of your post Mr. Thread starter

oops i meant the above post for mel-680625

mel-680625

meneither123: So you're saying "can it" for those talking politics and YOU immediately started the blame game on party yourself?  Repubs this go around have blown our lives right out of the water over "BUSHES" war. Not our war but Bushes. Nobody had any choice but to fall n line whether they liked it or not...NOTICE WHOSE IN THE WHITEHOUSE NOW??SPEAKS VOLUMES. 

********************

I apologize for the obvious contradiction in my claim, but my point was it goes both ways. I am tired of seeing the Democrats saying Bush stole the election in 2000 as much as I am Republicans decrying Obama before he's even president. Yes, I do have some serious reservations on him I've seen come to light, but hopefully I am wrong. I do support the president, even if I do not agree with him - always have and will. But, I think both sides just need to can it with the "Bush stinks" and "Obamanation" comments.

Point of fact - past six large wars, the Democrats entered us into Four, including the hated Vietnam. And, when Nixon (Republican) removed the troops from there, it became Communist. Don't think for a moment that this wouldn't happen if we removed troops too soon.

Also, out of the four Democratic wars, we entered only one for legit reasons - WWII. WWI we wanted to remain neutral but were asked to help, Korea we were forced into by UN (which a Dem president = Wilson - got us into) to do a "Police Action." Result - they're at a stalemate, still technically under war as only a cease-fire was signed, and Vietnam, we were asked by the South Vietnamese to help out. When Vietnam became unpopular and we had all the protesting going on here, all the North did was wait because Congress and the president would eventually kowtow to the will of the people and have our troops leave.

I'm not saying either Bush war was needed, but the second one wouldn't have happened if Bush Sr. made sure Saddam was defeated (i.e. he left too soon).

Typical Republican BS.

Your comments are out and out LIES. No surprise that is what they do best. 

WW I was not a 'democrat war' it was started because Germany was attacking our ships, Including the sinking of the Lusitania.

WW II was not a 'democrat war' once again we were attacked by Japan who were along with Germany and Italy known as the 'axis'.

Korea was not a democrat war. It was really a UN defensive war which was heavily manned by American troops. We were not forced 'into it' as you stated. And Wilson was years before Korea became a country. Try Truman.

Vietnam was not a democrat war. It was started by Eisenhower (R) long before JFK was elected. As to your idiotic statement that we lost because we pulled out too soon, that is the dumbest thing I ever read on Newsvine or anywhere. We lost because the So. Vietnamese people did NOT support their corrupt government or us because we supported that government.

Iraq War - part 1 was a typical Republican fiasco. Iraq owned Kuwait for over a thousand years before the Peace treaty of WW I gave them a separate country. Only reason we got involved was the fact Bush Sr. owned oil stocks in Kuwait. It was a joke. BTW, how has Kuwait helped us since the war, seems to me, since we 'saved' their butt, they should give us free oil for 100 years. But since that would personally cost Bush Sr. and Jr. money, don't bank on it.

Iraq War - part 2, what can I say, even bigger joke.

Why do Republicans lie, because if they told the truth they would become extinct.

You are unworthy of comment. You make statements that would assume you know all and everyone concerned ... and there is no way. Get a grip. You do not have the answers and you are not a hero for hospitalizing anyone.

Garylee: You contradicted yourself time and time again in your very long post. Being in the social service industry, I can speak volumes about the homeless. Me? Those who could not help their plight...help them out. Those who could...nope get a job or at least volunteer somewhere to at least thank those Salvation Army beds instead of being a pariah on society. I talk to them straight, not mean or with a soft poor you voice. Those under the bridges etc. don't want anywhere but there. Paranoia is rampant for good reason, fighting for every scrap they have is the norm, mentally ill are over the place, those who have given up and depressed to the point of suicide is way high. I could go on. Want me too?

In short-- blame the Democrats.

Blame Carter,

Blame Clinton,

----Bush was infallible,

----the Republican majority for 6 of the 8 years--- same

Blame Obama

Just accept it.  Don't try to argue with them.

Glad to see I am not the only one who noticed that! ...

but you did forget Saint Ronald ... how he became deified (sp?) is beyond me !

Deflation can be a disaster! I wouldn't herald it as a return to low prices either because guess what?  Your salary will go down in a deflationary economy.  Businesses will be slashing wages like it is going out of style. 

Deflation makes the payments in terms of purchasing power on loans increase.  Most American families owe atleast some kind of debt whether it be car loans, home loans, or student loans. If it is costing more to pay off these loans and wages are not increasing (they'd actually decrease in an deflationary economy) then you'd have a generation of Americans even further crippled by debt.  If you think the banks are going to restate the terms of these loans to adjust for deflation without some kind of government mandate, you are mistaken. 

Furthermore, deflation discourages deposits and investments.  Why should I risk my money in the market when I can bury my money in my back yard and dig it up 5 years later and make a return on it? 

Deflation is one of the main reasons we abandoned the gold standard.

Jason: Ain't it so brother, ain't it so.

BOOYAH Obed, Right on the nose. The point on prices is well taken!! Just yesterday went to my local auto dealer to have a small part repaired on my 92 vintage truck. I have taken good care of her over the years and only have 100,400 mi. on it now. To replace the sensor that tells the transmission to shift into overdrive, It cost me $95 to confirm that it needed the part-$440 for the part-and $200 to take the 15 minutes to do the repair; about 15% of the value of the truck so I was told. I would have to be some kind of idiot to buy a new vehicle when a single part such as this costs so much. These are "Throwaway" vehicles. You cannot afford to repair them thanks to our wonderful auto manufacturers. I say screw them all and let them go belly-up where they belong.

Deflation would be a welcome outcome as far as I am concerned. I am the pig who built his house of brick, not straw as so many have. Sure I would lose some assumed value of my home and such, but the residual value following this much needed correction would be alot closer to the actual value and would be relative to all.

Don't give these arrogant pig auto makers another dime, and screw the UAW bastards that donate 80 million to people like OBAMA who will no doubt see to it that they are richly rewarded for their deep concern for the American people.

the problem with defaltion is that big business cant make as much money LETS BREAK OUT THE KLEENEX

Jason-322376

Businesses will be slashing wages like it is going out of style. 

So what's new?Inflation has surpassed wage increases for some time now.  If a company feels like this a good approach because the CEO has a salary 10x that of what he needs to survive on and to pay them, they cut their hard working employees, then fine. If that's what they want to do instead of being competitive in the market place, then they will surely fail, if they want their greed, then they can live with the consequences, and tank...it would happen eventually anyway, sweat shop like conditions.  So now all you got is a company with no dedicated employees and a CEO soaking up all the profit.  To me this is what got us here in the first place.

Furthermore, deflation discourages deposits and investments.  Why should I risk my money in the market when I can bury my money in my back yard and dig it up 5 years later and make a return on it? 

Why keep those who got us here in business??? I could care less if the poor folks on wall street have a hard time keeping those 6 figure salaries they once had. Why not make your back yard hole your investment until they (banks, investors, corps..wall street, Washington)  fix their greed? I see no harm in it for me.

Your post is defending the crooked system and the rich behind it. Why do you believe we (American workers for American product) cannot survive if we love the drop in prices?

If the consumer mindset changes, then we can stand together on buying and not buying products from companies who pay a CEO ungodly amounts of $$ and the hard worker pennies. ....management pay needs to be re-evaluated for those companies that are crying. Until this is done, they don't my cheap tissues I got due to deflation, go cry to the guy who can afford to buy the expensive tissue so that another CEO gets rich, while his employees live in poverty.

And all i see is the receivers of the mass profits American companies made in the last 10+ years crying that their reign is over, and now are resorting to threatening Americans that if we don't buy their products they will hang their employees.  boo hoo

"Let's face it folks, the feds do not know what they are doing" - exactly.

"Yes, the CPI dropped 1% last month, but it was depressed housing and apparal costs that led the way, while food costs continue to remain high." - of course, we HAVE to eat, but we don't HAVE to buy new clothes every day. Is this not just the natural reaction to price increases in necessities?

You may be right about the fear factor by the Feds using the Deflation issue.

We may actually need a deflationary period to get the cost of living down.  The Treasury and Feds probably have been advocating dumping huge amounts of money into the financial system to keep inflation up and deflation in check hoping to encourage lending and spending.

 Deflation and deleveraging are already occurring and will continue as long as the consumer will not spend and or doesn't have the ability to spend from job losses and hard times.

Credit and debt through leveraged bank loans and general spending on goods and services are what makes our top spin also driving up inflation and debt. Without borrowing and spending that spinning top begins to wobble and eventually stops and falls.

Many cannot spend anyway and most of those who can most likely will not because of uncertainty and a lack of confidence to do so. Deflation could be the answer to bringing some sense of balance in the questionable banking practices with leveraged loans, stock market manipulation and overvaluing that has been occurring for years.

I don't believe that deflation can be avoided anyway whether its good or bad.

What also cannot be avoided is the huge debt and tax burden that has to be dealt with because of heavy government spending.  That is mostly what's driving my fear of spending  and the insane instability that still controls this economic and financial nightmare.

""Yes, the CPI dropped 1% last month, but it was depressed housing and apparal costs that led the way, while food costs continue to remain high."

Uhh, dude.  You totally forgot about the huge decrease in the price gasoline, an energy cost built into the pricing model of just about every consumer product.

Jason,

Food costs still continue to be high because the producers who are keeping it that way waiting to see what happens with gasoline prices. They are still keeping profits up knowing we have to eat. 

The gas prices having dropping with the drop of oil and other commodities worldwide which is the result of less consumption and less spending=deflation. That is a very good thing as long as it can last.

I wonder how we were once taught, and still continue to be told by professionals, to save until you have enough to buy what you want, but are now being told/forced that credit is the only way the world goes around?

John, I would deffinately qualify for one of those checks if the government were to adopt your plan.  My question to you is this, what would happen to the prices of goods if the government gave everyone a huge refund?  My guess is that inflation would skyrocket.

I'm going to assume the $700B the government has for this bailout is "tax money". Money the middle class paid as taxes to the government.  I just watched a "J.G. Wentworth" commercial.  "IT'S MY MONEY, AND I NEED IT NOW!!!"

John-638398 no you ignorant fool, this isn't the 'fed' solution, it is the REPUB solution - rich people ALWAYS need more money.  I can see from your drivilling and drooling you obviously have voted repub, because you are just too stupid to add two and two.

Tom, how long have you been drinking the kool aid? I guess the democrats have never done anything like the republicans. Keep living in your fantasy world where the repubs are demons and dems are angels. Both parties play the "what's in it for me" game. I guess the democrats didn't add to any of the $150 billion in pork added to the $700 billion "bailout". Grow up and get a clue.

Tom, calm down you are one angry person.  How are you going to fix this?  What is exactly that you recommend we as individual Americans do to help rebound this economy?

Tom didn't take his meds today.

Congress is democrat controlled btw.

Also, if any poster are from IL, how is that good 'ol democrat leadership? Our democrat leaders here have raised sales taxes to be highest in the nation, all our other taxes (gas, property, etc are all up at the top for highest in the nation)almost every single one is involved in a scandal (our governor will be in jail soon). The democrats solutions here? Raise taxes.

To say this is a "republican" issue just proves that you really have no clue to what you are talking about.

Good News and Bad News

(The good news is that prices are coming down, the bad news is you're out of a job!)

Can't you folk get it. The problem is not the deflation. Deflation is just a result of the problem, which becomes a part of the process called depression! 

It's like having a guy with high blood pressure, 220 over 110! He ruptures a vein somewhere and goes into shock. The internist takes his pressure and lo and behold he barely has a pulse, and  his pressure is down to 70 over 30, because he's dying.

The internist goes over to the family and says, "I have good news and bad news. The good news is, the pressures' down!!!" 

We are embarking in to uncharted waters!!!! 

I would say it's very scary!

Yes, but that is the problem.  If businesses can't sell their product now for what they paid last month for the materials, plus they have no money coming in from investments, they have no choice but to cut employment costs to stay afloat.  Huge corporations like Walmart maybe can absorb the blow, they can bully their suppliers into cutting their own throats to keep the big contract, but smaller businesses and especially new businesses with startup debt to pay have less chance to cope.

What if the company has "union" labor?  They're not going to willingly cut their wages, THEY have a contract!

DC,

You are correct. And I would add to your statement as well that when small businesses go "out of business" leaving only the big guns so to speak, prices will rise again due to a lack of competition. Your WalMart example is spot on. 

I am whole heartedly against what is going on today in America, lost jobs, lost homes, lost families and the rich sporting around in their airplanes and I do not support bailouts of any kind!

But the simple fact remains deflation is very good for America right now, but after the dust settles, prices WILL rise again and the consumer will have LESS of a choice at to where they spend their money.

"The simple fact remains deflation is very good for America right now"

We got a crippled financial system because of bad mortgage debt and you want to INCREASE the cost to the average american of these existing debts? You got many, many Americans who owe more on their house than it is worth and you want to INCREASE what it will take to pay it back?  Do you not see a problem in that?

Sure prices for consumer products may drop but guess what? Your salary or wage will drop with it. 

The only people deflation will benefit are those that have no debts and tons of money stock piled (AKA the very rich).

Jason,

You are correct.

I was referring to the very short term.

ROFL!

I think that the economy will also not continue to produce the high wage jobs in the sectors of the economy that have competition from overseas so the overall per capita US consumer spending will continue to fall until it is near the levels seen in Canada and western Europe. From there it will remain stagnant for whatever number of years it takes to retool the US economy and infrastructure to produce goods useful to a global market that is energy efficient and hopefully environmentally friendly. Any economic stimulus must be geared towards that retooling, economic realignment and infrastructure development.

You are probably correct, where there is cheap overseas labor to do the work, this has-been nation will also see a fall in wages. There is a big problem here. You campare us with Canada and Western Europe. The people in these countries have a social net that Americans do not. They get medical care and higher education paid through their tax money. We do not. If wages fall as you predict, and I believe they will, then we will have some real problems as by default our living standards will be lower than the people of these others nations.

The problem with your "solution", that is, the retooling etc, is the following. Consider that whatever "retooling" we can do here can be done by cheap overseas labor or by importing cheap overseas labor here to perform the work! This includes work that requires a high level of skills and education. Believing that American corporations will spend the money to "retool" in such areas as energy efficiency and environmentally-friendly technology, and NOT seek the cheapest labor possible, is a bit naive. If we have to compete with third-world wage scales, we will become a third-world economy. When you stare into the abyss, the abyss stares back at you!

Since alot of the financial support for "retooling" is going to come from public funds, it would certainly be appropriate for the feds and state governments to demand that energy efficient and green goals be adhered too and US workers be used exclusively. As to the need for some safey net there is obviously going to have to be some tradeoff where it is acceptable to recieve lower wages in return for affordable healthcare and retirement security. If policies are developed to make the deflation spiral as uniform as possible across the entire economy it would hopefully minimize the disruption and make the difficult adjustment period a little easier to deal with since we all will be taking the hit together.

the best part of the coming depression is substance abuse will go up! I am starting a new "business" FOR SURE! :)

tommy,

Let the republican buy his own drink. They had several years of stealing, now it's the Democrats turn.

They had several years of stealing, now it's the Democrats turn

How right you are.

And with majorities in both houses and the presidency, they should be able to steal without all the political infighting that impeded their competitors.

Oh, and don't worry about buying me a beer.  I brew my own, and I'm not a republican anyway.  Save that money for your own family.  If you are middle class, you're going to need every penny.

DC,

And with majorities in both houses and the presidency, they should be able to steal without all the political infighting that impeded their competitors.

It's more efficient this way. They'll have more time to focus on the failures of the last 8 years and hopefully correct some of them. BTW: Did you ever notice how Bush took so much pride in boasting about his failures?!

Kmarx-do you honestly think that Obama's choice to fill the Treasury postition is going to change anything? He is looking at Janet Yellen (the current San Francisco Federal Reserve Governor) to fill this position. Hell, it was the Fed that caused this mess....nothing will change!

James - most people do not want to know the truth. They would rather blame either party for the mess we are in instead of focusing on how to right the ship before we crash on the rocks.

We need less government, sound financial policy, a return to the gold standard.

Whatever happened to working hard and doing for yourself? Why do most people expect or want the government to provide for them?  When has the government ever been able to implement a "social" program without destroying what they are trying to help and costing a fortune in the process? Would you trust your money to the government?

I agree 100% with both of you!