Deflation usually means “a decrease in the general price level”.

Obviously, this is not happening.

perhaps usage of the term “Deflation” as used by posters on this board means:

“Alternatively, the term was used by the classical economists to refer to a decrease in the money supply and credit; some economists, including many Austrian school economists, still use the word in this sense.”

http://en.wikipedia.org/wiki/Deflation

So perhaps the credit contraction and decreased velocity of money is what posters are alluding to when they use the term “deflation”.

It would be interesting if we witness continued credit contraction coupled by an increase in the general price level.

Watch Gold for clues.

But my main point. What deflation or depression? During the depression food was very cheap. How about 25 hamburgers for a dollar? Food prices are going up at present at a surprising rate. So are college costs, insurance, medical, heating and electric bills, munincipal taxes, alcohol, tobacco, loan-related costs, etc. What is deflating?: the ever-fluctuating gas/diesel commodities and speculative investments such as stock and real estate I only wish the real cost of living would collapse, then people with a cash position would at least prosper. Ironically, hard times will force the gov to raise taxes, particularly at the local level. Not much chance we will see rollbacks in sales taxes, State income taxes, property taxes, gas taxes, toll roads, parking tickets, and licensing in 2009- let alone rent, heat, college, or food.

Not arguing with anyone here, all of the discussions on this site are interesting and I learn a lot from them.

Here is a sample of predictions:

1. Bottom of October 10:

http://financialtraders.blogspot.com/2008/10/stock-market-crash-october-2008-bottom.html

2. Bottom of October 10:

http://financialtraders.blogspot.com/2008/10/dow-sp500-nasdaq-100-bottom-october.html

3. Top of November 4(election day top),

http://financialtraders.blogspot.com/2008/11/stock-price-prediction-tomorrows-stock.html

4. Bottom of November 13,

http://financialtraders.blogspot.com/2008/11/stock-market-bottom-november-2008-price.html

5. Bottom of November 14 (today):

http://financialtraders.blogspot.com/2008/11/tomorrows-stock-price-prediction-qqqq.html

How can these people do this, and the rest of the people lose their money?

Concur with your thoughts on consumer psychology at the present. In fact I feel they are out of equation for the time being. Any family out there now, not reducing debt and making provisions for future possibility’s is morally bankrupt too.

I my self shredded all but one credit card years ago, bad financial tool. Why would I need to pay interest on my spending/hard work out of connivance?
In my reading/interpretation of facts, its credit card company’s that started all of this via deregulation of accounting/contractual standards, advanced/predatory/psychological warfare/advertising campaigns on the citizenry. The housing/mortgage markets just borrowed the formula and took it up a notch.

The hole credit system is geared to over stretching ones assets. In fact the pyramid has been turned upside down as its now necessary for the consumer to fix things, and has the real control of the market.

Not unlike the Mining industry in America. Citizens given social license to the powers to be as a vehicle to wealth/posterity, with out the knowledge of the said industry’s long term impacts to the economy/environment they lived in and long term generational conseqes. Jarred Diamonds bitterroot valley is a good comparison.

Now citizens are getting screwed for their social license to Financiers, via financiers total disdain for the working class/wage slaves/well of their wealth. If word of the real mechanisms/people responsible for the mess we are now coming to terms with ever got out, well it would get very messy. China has a long standing punishment for corrupt government/business people. But this is America and would think a long march through the streets to Key West, FL. and then paddle to Git-mo would suffice.

Skippy

you mean for every dollar of credit that defaults correct? credit paid down is available for reinvestment into this fractional reserve system. worst case is it doesn’t get levered again due to lack of borrow interest, there’s not an exponential number of dollars removed from the system.

I do not believe that those employed in any facet of the auto or furniture business would agree with your rosy outlook.

‘Motor vehicle and parts dealers sales were down 23.4 percent (±2.1%) from October 2007 and sales of furniture and home furnishings stores sales were down 13.5 percent from last year.’

The employees in these fields think that the sky is falling.

‘Retail Sales Plunge Most On Record’

http://globaleconomicanalysis.blogspot.com/

Treasury said ” We are stabilizing Freddie and Fannie to bring down rates to consumers to stabilize housing prices. Bringing down rates is the best thing that we can do. “

Dissonance Alert: Why in the world do we want to “stabilize” housing prices ? We need to isolate a segment of speculative prices in a special program that allows the capital prices paid, less a shared loss, to mirror the competitive market prices. The age of synthetic market prices has to come to a close.

One could even argue that all of the decline was the ultimate result of dropping oil prices.

All in all not bad numbers considering that everyone said the consumer hit a wall.

As to what this says about a change in spending/savings habits, I am not very optimistic. They aren’t hurt yet….

I followed your link to itulip but I was not willing to register so did not read the link. Thanks anyway.

I do not believe that we will have inflation in the near future, for reasons that become more obvious every day…at least, obvious to me.

Nor do I believe that the discussion about deflation/inflation is too difficult to understand for those that do not believe that we will have inflation near term.

Anyone putting forth such an arguement must not have much firm ground to stand on…The debate itself is not surprising for much of the population would benefit from a bout of inflation.

Many here tend to use a great deal of verbiage about the R/D question when it is not necessary. All one has to ask is ‘Will the Fed/Treasury be successful in enticing the citizens to continuing to borrow and spend?’ As I pointed out above, so far the answer is a firm no. Those running the show made the awful mistake of causing fear in the citizens. They still are not aware of what they did wrong…that is how out of touch they are.

FDR understood that one of the underlying causes of the continuation of depression was the fear instilled in the people. He made that obvious when he said ‘all we have to fear is fear itself’…But, Bernanke seems unaware of the the current fear in the public consciousness. Maybe the ‘fear’ speach is being saved for Obama?