I've been trying to figure out where this trainwreck is headed. The Government money bombs would lead you to believe inflation is around the corner. If that was the case this would be a very bad reccession. The more I look around and see, the more I think we are in for the worse Deflation in the history of our lifetimes.That would mean that this is more like a depression.
Asset and income deflation were gorillas in the great depression, and that is what I see happening. I know that my used car inventory has deflated in a huge way, causing me much financial pain. I also know that sales are down 60% because people have no discretionary income. They are experiencing cut hours, pay cuts, or out right layoffs. The ones that do have discretionary income are choosing to save it instead of spend it.
This creates less demand for goods, which causes business to cut costs and spending, causing a downward spiral. Until the job market turns, and people begin spending again the 500lb gorilla in the room has a name beginning with a D not an I. Love to hear others thoughts on this topic.
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