D-D-Deflation

There are so many reports and articles about the state of our economy and the future of our economy. It is hard to keep up with the massive amounts of opinions regarding where we stand right now and what it means for the future.

As with all topics that run rampant through the media there are buzz words, new terminology, and down right scary statistics.

But what are the facts?

This information comes from DeflationAlert.com

What is deflation?

It is a general decline in prices, income, and credit. Right now our country is experiencing all three. Times have drastically changed and the shift is toward a time of less credit use- at least in the private sector.

Even though incomes did not increase, the amount of spending did and in order for this to happen consumers relied on credit. For twenty years this was how our economy thrived and not surprisingly, the bubble burst.

This harsh reality has changed the temperament of our country. We went from spend, spend, spend to penny pinching and frugal. I have never seen so many people returning cans and bottles at the grocery store or cutting out coupons to use when going out to eat for dinner. People are paying off debt such as vehicles, credit cards, etc. either by choice or because they must (foreclosure).

Allocating funds to pay off debt instead of pouring money into the marketplace is killing our economy. Therefore, the government is borrowing at a record pace, pouring funds into the economy as fast as it can.

“The action-the destruction of capital through the repayment of debt- is what is causing deflation.”

“Over the past 2 years our debt outstanding as a nation has declined! Deflation is already occurring, and more is ahead. As banks continue to fail, and as lenders confront the reality of the loans on their books, more losses will be taken.”

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