Dr. Housing Bubble 06/23/09

[Crewleader]

Deflating our way to Prosperity: Five Major Sectors of our Economy Pointing to Demand Destruction Price Deflation. Education, Wages, Housing, Stocks, and Automobiles.

The argument between deflation and inflation is still raging like a wildfire. From reading many articles and following many experts on the topic, it would seem that there is still no clear consensus as to what is going to happen long term. Just think of how many experts actually saw the housing bubble forming. Not since the Great Depression have we seen consumer prices contract so severely. Much of the argument for inflation comes from the actions taken by the U.S Treasury and Federal Reserve. Without a doubt, we have never witnessed such massive injections of liquidity and bailouts happening all at once. The argument goes that with so much money pumped into the system we must see prices rising at a certain point. Maybe but that will be for another day. Yet the current facts point to a disturbing menace that is deflation:



The most widely followed measure of inflation in the U.S. is the Consumer Price Index (CPI). As the chart above indicates, we have seen our first year over year decline in the CPI since the 1950s. Now keep in mind, last year we had the massive oil bubble which means we will probably have year over year declines for a few more months simply because oil nearly touched $150 per barrel last year. For our purposes we are going to look at consumer prices as our measure of inflation and deflation since this impacts most people in a more understandable way. Now before going forward, it is important to look at what areas are contracting during this recession:



http://www.doctorhousingbubble.com/deflating-our-way-to-prosperity-five-major-sectors-of-our-economy-pointing-to-deflation-education-wages-housing-stocks-and-automobiles/