11 replies to this topic

[OEXCHAOS]

I've seen a bit of inflation, but now, it appears that I'm seeing a bit of DEflation. Housing is a big piece of the expense of anyone these days. If home prices fall 20% or more in some area, one of the biggest bites is suffering deflation. 20% on a 200K house is 40,000. That's a lot of Eggs, gas, and milk, I can tell you. Mark

[HoseB]

I've seen a bit of inflation, but now, it appears that I'm seeing a bit of DEflation.

Housing is a big piece of the expense of anyone these days. If home prices fall 20% or more in some area, one of the biggest bites is suffering deflation. 20% on a 200K house is 40,000.

That's a lot of Eggs, gas, and milk, I can tell you.

Mark

Agree that housing decline is deflationary (as is the pay-down of debt if done in a non money-print manner). However, will the Powers allow it to occur? Will they print money hand-over-fist in an effort to avoid a deflation and give us perhaps an equal or worse problem on the inflationary side? Will there be deflation in spite of the maximum money-pump?

I don't claim to have the answers, but I think they are the most important questions we will face over the balance of our financial lives. (Personally, I think they try the "all-out money-print" which results in hyperinflation and destruction of the $USD... and we won't be cheering that we avoided deflation. I also hope I'm wrong.)

Edited by HoseB, 26 August 2007 - 06:25 PM.