Deflation has Arrived

Not too long ago (three months) everyone was worried about inflation.  The price of gasoline was skyrocketing and food prices were increasing.  As the financial crisis took a major turn for the worse in mid September things have changed big time.  Look at the following trends.  Even more ominously, as of the date of this post, these trends show no sign of reversal despite bailout after bailout.

• Housing prices continue to decline
• Gasoline prices are declining
• Even food prices are declining
• The stock market is declining
• Employment is declining
• All basic commodities, lumber, steel, precious metals, grains are declining.
  

Folks, this is deflation, a whole new ball game.    At first you may be tempted to think this is good.  It does feel great to fill your gas tank for under $20.  However, if you lost, or are in danger of losing, your job things don’t look rosy at all.