Everyone it seems is worried about inflation and to be honest we're a long way before the day of hyperinflation wrecks our lives. In fact, it may never happen. The reason is so simple- everyone is expecting it and mentally preparing what to do when it arrives. It's like that weird cousin that always shows up at your door when you least expect him. You tell yourself, the next time he shows up...
We are, in fact, about as close to a deflationary economic condition as we can be without officially calling it that. Excluding food and energy consumer prices rose a modest 1.8% for the 12 months ending in May.
Once the Federal Reserve releases the stimulus dollars the natural reaction is that soon after we'll revisit the days of Jimmy Carter, But, with Americans on a belt-tightening campaign and saving money like never before this may not happen. In order for inflation to take hold people have to spend money, and today's consumer appears to want to sit things out.
The problem some economic experts contend isn't inflation in a year or two but deflation here and now. When people dont buy prices fall and businesses start laying off more people to meet the lessened demand until finally closing their doors. Economists who are paid to worry dont put inflation as a relevant worry any closer to the top of the list of worrisome things than deflation.
No comments:
Post a Comment