What do you think about deflation?

What continually astounds me is how a lot of people think that when Obama takes office that somehow magically all of these problesm will be fixed.  IT DOESN'T WORK THAT WAY.  People - wake up - the government is not going to do anything to help you.  You best get off your bee hinds and get out, get educated, get a job, and work like crazy, because that's the only way this country can be fixed. 

Continuing to blame Bush is just an excuse to bask in your own ineptitude and laziness.  You can either be part of the problem, or part of the solution.   

Prices will fall until the market sets them.  What we are seeing right now are prices falling to the level where they should be if consumers are not relying on credit for purchases.  Credit purchases negate some of the decision making.  For instance, a computer costs $1,000, but on a credit card that's only perhaps $50/mo.  So the purchase decision (utility calculation) is biased toward the monthly payment.  In this "new" economy people are being faced with the decision to pay $1,000 up front, changing their utility calculation.  So prices must fall for the concumer to see more utility.  Welcome to the past!

Electronic goods have been deflationary for years, and the industry has boomed through innovation and understanding consumer desires.  The current deflationary period will settle once producers understand people now need more utility from their purchases in order to make larger initial outlays.  This correction is a positive development of the poor economy as producers will be forced to innovate or fail.  Let's see if Detroit gets the message...

I believe that this is just another fear tactic employed by the government to continue to scare the american people into believing that nothing will ever get better and to continue to have a belief that we are all going to die. The oil prices are not the problem. We continue to be focused on the problem and just pipe dream the soultion, like it's not attainable or something. Everyone wants to keep feeding fear and that's not gonna get anything done.

I have the excellent solution to the problem.  Let the whole damn system collapse and let's start over.  It's the price we pay for the 28-year binge we've been on.  Time to settle the tab; and special blame can go to our last three Commanders in Chief who went hell bent for election for globilization, thinking it would make their rich friends a fast buck.  Well, guess what; all that plant and equipment and jobs they shipped overseas.  It's gonna be worthless and that's exactly what they get.  I hope they all climb into a high building on Wall Street and jump off.

Debtors want inflation whcih punishes people who have saved and lived within their means.

"Why buy a $1200 flat panel if it might be $800 in six months?"  Well the computer industry has done quite well with this business model these past 20+ years.  If you are patinet and pay for what you buy instead of borrowing to buy it,  saving for six months instead of whipping out the plastic is a very smart thing under deflation.

In the long run, getting people back to being savers instead of debtors will be a good thing.  I say don't prevent deflation, just slow it down so people have a chance to learn to deal with it.

I welcome deflation, especially in real-estate, my property taxes are way too high, no way in reality is my lot worth more than the house and garage that sits on it! But this is how Houston financed its sports palaces without "tax increases", instead jacking up land values to raise revenue.

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It seems to me deflation is not hard to fix; just print more money.  The real problem we have right now is that we need to deficit spend like crazy (think FDR and WPA) but we already have a huge debt.  Every economist in the world would says deficit spend in recessions/depressions, and run surpluses in good times. Idiot Bush decided to deficit spend big time in the good times - worst President ever, no doubt about it.

It seems to me deflation is not hard to fix; just print more money.  The real problem we have right now is that we need to deficit spend like crazy (think FDR and WPA) but we already have a huge debt.  Every economist in the world would say deficit spend in recessions/depressions, and run surpluses in good times. Idiot Bush decided to deficit spend big time in the good times - worst President ever, no doubt about it.

The article cited two "downsides" to deflation:  people might delay buying items hoping that prices will further decrease; and for those with debt, repayment will be relatively more expensive.

As to the first "downside" - so what?  People routinely wait for sales anyway.  If it is a necessary item, you buy it now anyway.  If it isn't a needed item and you can wait, delaying a purchase is not the end of the world, even if many people waited.  This is really only an issue with regard to truly discretionary spending to begin with, and I just don't see the possible putting of the brakes to discretionary spending being a problem.  It will lead to an increase in savings immediately, which in turn could lead to more investing, and when a purchase is finally made, it will be less reliant on credit.  The overuse of credit is what largely contributed to the problems we now have to begin with.  Deflation for those who have money to spend results in things being more affordable.  Our national housing market has been in need of that for more than a decade now, and the continued increase in housing costs has resulted in the crazy loan schemes that have triggered the current crises - a crises that was largely supported by the unrealistic view that housing prices (and hence value) would just simply continue on an upward trend anyway. 

As for the second "downside", a more realistic view would include looking at what is going to happen anyway.  People buried in debt are going to bankrupt out of it and go for the "fresh start".  Many really won't have any other choice, particularly when faced with job loss and/or out of control health related debts.  Further, there are many people who are not buried in debt, and being able to buy more with what they have has got to be a stimulous to the economy, especially if they continue to consume within their means.  Those who have some debt, but not enough to bankrupt, could also benefit from deflation in that expenditures for needed things go down, leaving more to use to pay down their debt.  I really fail to see why deflation is such a boogyman.  Some will say that wages will go down - that may or may not be true, but wages almost never keep up with inflation anyway, so what is the real point with that argument?  Even if wages go down, so does the cost of goods, and in the end one result is going to be a stronger dollar, particularly if deflation is not occurring at the same rate in the countries whose currency is being compared to the dollar. 

Where deflation is going to cause real problems is with the large debtors who cannot easily bankrupt - and that group includes government entities that are the worst offenders of all when it comes to not living within their means.  It is beyond high time that our federal government stop increasing the national debt by spending like a drunk sailor on shore leave.  State government and local government need to do the same thing.  Arguing that inflation is good for debtors, particularly large sovereign debtors who have no meaningful credit limits, is only going to result in continued spending beyond tax revenues, and sooner or later someone is going to have to pay the piper.  But by then, the debt will have spiraled so far out of control that inflation (which generally hurts everyone immediately anyway) will not realistically make repayment easier, but will instead just position these large debtors so that they have no choice by bankruptcy.  When that happens to governments, it boils down to debtor nations obtaining debt relief from the creditor nations in the form of total or partial debt forgiveness.  Numerous third world countries have in the past found themselves in that situation, and before the U.S. is in that predicament it needs to put a stop to the out of control spending it is currently engaging in.  As it is, the national debt is getting so large that in the very near future half of the revenues collected by the U.S. government will be going towards servicing interest on the national debt.  As with a consumer who sees more and more of their income going towards interest payments, there will soon come a time when interest on the debt has overwhelmed the debtor.

In short, I don't see deflation as the boogyman the article wants to portray it as.  Short term it is good for those in a struggling economy, and in my view, long term it will help bring prices back down to a sustainable level.  The real fly in the ointment is the fact that government is likely to continue spending beyond its means, which in the short term will mean ever increasing taxes in one form or another, and in the long term will result in economic collapse because there is only so much in taxes that can be levied before it becomes a completely useless endeavor.  You can't tax incomes that don't exist, you can't take all of those incomes that do exist, and taxes on spending have their limits also.        

As naive as I am, perhaps and admittedly so! I do not see what the problem is, I think that the economy will work itself with checks and balances inthe future what ever distance.

I'm glad to see gas prices go down. For awhile there, it was way too high and the oil companies were making billions of dollars in profit. And it's good to see housing prices go down, because in the first place, they weren't worth the asking price. People tend to bite off more than they can chew and then they can't afford to pay and that's when foreclosure comes into play. Once Barack Obama gets in office, this country will see a big change for the better. It won't be like it has been for the past eight years. Americans  will be able to live again.

The prices of everything were artificially inflated and reflected price gouging by greedy marketers.  It's about time the prices started to go back to a realistic level.  People will not "hold off" to buy things for 6 months, hoping the prices will fall even further!  People are so broke they can't afford to pay their house payments--hence the record foreclosure rates.  What will happen is that those fortunate to have enough for discretionary spending will take advantage of the lower prices knowing that the future is uncertain at best!  The rest will finally be able to fill their gas tank instead of putting only $15.00 in to get them through until they can add another $15.00, and buy food.  Get a grip.

This seems to me like we heading back to reality.  This is a direct reflection of the deregulation of our economy leading to price gauging and minipulation of markets.  The cost of producing goods skyrocketed with the rise of oil prices leading to record shattering profits for oil companies all while the consumers wages have stayed the same.  As the wave of underqualified people recieving loans and credit increased, the amount of real money being spent decreased.  Now people are left with too many bills, lenders are not getting paid back, and people don't have the money to spend, or the qualifications for loans.  In the mean time, the people who artificially inflated the market and ran countless industries like autos and housing into the ground are making out like bandits with millions and even billions of dollars.  People on both sides are guilty, and things will probably level out where they were around the year 2000. 

The Japanese philosophy of business is simple, "A small profit and endure forever" as apposed to Exxon's philosophy of "a windfall profit and the public be damned"

I am sick off our Government and all these companies that keep try to fool the American people with all these doom and gloom warnings... Hurry if we don't get 700 billion the world will end, GM - give us 25 billion or the world will end.. Now you all are trying to tell us thing are to cheap. Give us a freaking break, I like cheap.. Its time for you all to stay are from the TV cameras and you keyboard. NO MORE BAIL OUTS PERIOD.. THE PEOPLE HAVE SPOKEN...

Deflation! Inflation! Financial Crisis! Stock Market Collapse! Bailouts! Automakers Broke! This, that....

Sky is falling?

Oceans are drying?

Global warming or freezing?

Gas prices up or down?

Have we invaded Iran yet?

Any layoffs today?

Republican, Democrat, Liberal, Green party, Micky mouse party, Right, Left, Up, down, sideways?

Is my credit history perfect?

What else do I need to worry about?

Deflation is the natural result to the bursting of a gigantic debt bubble. Deflation is a horrible monster, far worse than inflation. Most articles written about it focus too much on prices falling as a good thing. The problem really is that ASSET VALUES fall; just look at your stock portfolio or 401K for example; or the value of your home.

The reason it is a such a monster is because it is accompanied by business failures and mass layoffs, forcing people to burn through their savings or sell off assets that have lost much of their value.

The problem can be remedied by printing press money; described as a "helicopter drop" by Ben Bernanke. The problem is main street is hurting like never before and the "helicopter money" thus far has gone to wall street and it has been squandered on things like bonus's for executives and junkets for companies like AIG. THIS IS NOT GOOD.  

This is leaving people destitute and something really should be done about it soon. Thus far $3 trillion has been printed and given to wall street. If this same amont were distributed to each American taxpayer, that would translate to about $15,000, which would help people pay down their debts, become current on their mortgages and stimulate retail spending.

This would weaken the value of the US dollar, but would not seriously harm it. It would offset the super strong deflationary forces that are in now in full swing.

I don't think it is healthy to worry about the economy.  When disaster strikes the United States and multitudes of people are affected, people respond with kindness and generosity.  "The greatest thing we have to fear, is fear itself."  If everybody worries, people will hoard, things will get worse, people will get desperate, crime will go up. 

The best thing people can do is to to help the economy is to be generous.  Get out of debt yourself, help others get out of debt, teach people to be manage money responsibly, and become producers rather than just consumers.  Compete in the market.  Don't let the market control you. 

It would help the economy if we had a 2 week blackout of negative news about the economy.

How do you expect the consumer confidence will go up when we are told hourly how bad it is.

The media makes consumer confidence.  Don 't tell us how bad it is.  See the good and it get better.

We as Americans have had it to good for to long. We take everything forgranted. We need to stop wanting every thing and get back to the basics. My grandfather use to tell me,(LIFE IS WHAT YOU MAKE OF IT. DON'T EXPECT THE GOVERMENT TO GET YOU OUT OF A JAM....GET YOURSELF OUT.) I have lived by these words for almost 25 years now, and still grateful for everything I have.