The US has reported its first period of deflation in 61 years.
Prices dropped 1% last month.
US consumer prices plummet | BreakingNews.ie
This could be a very serious development, but hopefully is just down to the record falls in the price of oil and the record increase in the value of the dollar.
"Who will bailout the IMF after FF is finished with them?"
Good times.Originally Posted by seabhcan
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Young dan has been predicting this for months.. it'll get a lot worse before it gets any better
I think you are mistaken, the CPI in the US is 3.7%. Inflation is still alive and well, the 1% figure quoted is the fall in the rate of inflation from 4.7 to 3.7.
It is a massive fall in the inflation rate and does raise fears of deflation in the future, but the US is not in a period of deflation.
In fact deflation can represent economic activity that is either good or bad. If prices are falling because of supply side i.e. technology or productivity gains, then it is good.But if prices are falling because of movements on the demand side, then it is bad for the economy.
I'm afraid if we do enter into deflation, it will be of the bad variety and monetary policy isnt particularly well suited to dealing with that. It's not something any of us want to wish for.
Last edited by euroboy; 19th November 2008 at 07:43 PM.
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2000miles
where did u get that pic? - it's great - i'd like to post it somewhere else.
"The individual is handicapped by coming face to face with a conspiracy so monstrous he cannot believe it exists.'' ~ J. Edgar Hoover
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It's awesome isn't it! Just type in "Bernanke Helicopter" into google images!
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