Quote Originally Posted by karim0028 View Post
You know Rajiv/TPC, i keep looking at this and one side of me wants to believe this viewpoint but the other side just doesnt understand why people think that people saving money or spending/not spending has anything to do with inflation/deflation
We are discussing two separate event patterns that some might call deflation.
  1. Less money being spent, paid, lent and borrowed.
  2. Lower prices for the things we purchase.

The first of these has been happening for the last couple of years.

In good part for that very reason, the second of these has not been happening.

We had a mass production, long supply chain, mercantile economy tuned for good times, cheap credit, high volume and constant growth. This economy has become "detuned". The economic engine is running rough. Vendors have to charge more just to meet expenses, given their unchanging fixed expenses, lower sales volumes and higher cost of goods (from their suppliers, in the same boat.)

Some call the first deflation and cry out: behold the deflation!

Some call the second deflation and cry out: B.S. - this is no deflation!