What Is Deflation?

 by: Delwyn Lounsbury

Everyone is wondering, What is Deflation? Are we going to have inflation or deflation? President Obama's rhetoric and actions bashing business continues even when the statistics show the deflation economy getting worse at every turn. The 9.6 unemployment rate does not include those that quit looking, went back to school, moved back in with mom and dad or started a life of crime or prostitution. It sure does not include the businesses that have gone belly up and the rest of us who are seeing our income from sales and commissions drop. President Obama's actions are, "bad to the bone," for boosting business.

What is deflation? It is when business people only get more uncertain and unsure and prices start dropping. Like the real estate crash. This freeze up in hiring, business expansion and lending will lead to more trouble in the deflation economy. The GREATER DEPRESSION actually started in year 2000 with the dot com stock climax. The deflation economy cycle may not end until 2016 to 2018. At that time most your assets may have lost 90% in price and unemployment could be 30%. Even gold may be down 50% from today's lofty price of $1,350 per ounce, according to Robert Prechter, President of Elliot Wave International investment services.

Our report on: What is deflation? Is supported by some recent statistics. One in seven Americans are considered under the poverty level. That's 14% of the population or 44 million people. Real estate foreclosures rose 25% in July of 2010 to 95,304, the highest number on record. 275 banks have closed - The most since the 1930's. Net worth - the total of Americans assets - homes and investments minus debts fell 2.7 per cent or $1.5 trillion in the second quarter of 2010 according to the Federal Reserve. Total is now $58.5 trillion with a low of $48.8 in the first quarter of 2009 and an all time high of $65.8 trillion. Finally, 41 million people are now on food stamps. That is up 45 percent since 2008 when President Obama took office.

Helping the economy get top heavy and crash was the migration of many former union workers onto the government payroll. Government employee hiring has increased 10% under the Obama Administration. They knew the government would not go out of business so they joined the bandwagon.

Some 22.5 million Americans are now employed in government jobs. It is like a large parasite is sucking all the energy out of the economy. Ever since Franklin Delano Roosevelt started the socialistic "New Deal," government has grown larger and larger. If we are 10 years into the Greater Depression as Robert Prechter and I contend, this bloated government structure will make the depression worse. Free enterprise and lower taxes letting business have the wherewithal to hire and expand is the only solution.