Consumer Prices in U.S. Decline 1%, Most on Record

http://www.bloomberg.com/apps/news?pid=20601068&sid=aEUKE5CH6LeU&refer=home

by time_management • 18 years ago

7 12 18 years ago

bloomberg.com

thomasmallen• 18 years ago

Just goes to show how much we were getting shafted by OPEC.

tocomment• 18 years ago

Reddit isn't going to like this ... no sir

Prrometheus4• 18 years ago

Oh no! Not something that's good for the consumer! Hurry up, someone print more money.

For the record, in the post-Civil War error we experienced mild deflation and strong economic growth. As long as prices don't make sudden, double-digit jumps, the economy can cope with it. And it's NICE to see consumer prices going down for a change.

crabapple• 18 years ago

Not something that's good for the consumer!

no doubt some reversion to the mean is beneficial...but a healthy economy shows some nonzero manageable inflation level...like around 2-3%. a deflating economy is deadly in the longer run, because demand goes away and so does employment.

biohacker422• 18 years ago

Exactly. I have no debt and a bit of cash savings that are now worth 1% more, woo hoo!

Sustained high deflation is only good for you if you have a magical source of guaranteed income, completely and totally independent of the economy, like a magic money printing machine.

timr• 18 years ago

"Reversion to the mean" is the important observation here. Everyone seems to have forgotten that prices have been skyrocketing for the last two or three years.

As recently as six months ago, everyone was freaking out over the possibility of runaway inflation, and the government was cooking the official statistics by excluding such "non-essentials" as food and energy. This is one of those times where moderate deflation is probably a healthy correction, and I hope the government doesn't try to stop it.

Prrometheus4• 18 years ago

>.but a healthy economy shows some nonzero manageable inflation level.

Not actually. Permanent inflation is a feature of modern fiat money regimes. As I noted, we have experienced prolong periods of modest deflation and economic growth in the past.

Economic growth tends to increase prices for all the usual Keynesian reasons and tends to increase the money supply, even with a commodity reserve currency. However, increased productivity tends to reduce prices. If productivity increases fast enough and money growth is limited by a commodity standard, it is possible to have a growing economy with declining prices. In fact, it has happened in the past, as I noted.

Consumer Prices in U.S. Decline 1%, Most on Record

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