Richard Hawes I’m on twitter at http://twitter.com/rrllhh My first tweet {When we have deflation, cash is king. The price of everything is going down except the “almighty dollar”. } With a 12.5 month supply on the housing market it is partly happening right now.
When I say that “cash is king”, I mean that no investments will do well except for cash. Deflation gives no incentive for business to invest or for consumers to make major purchases when it is going to be cheaper. Economic activity just goes into a downward spiral until something like a world war “primes the pump”.
The great depression was caused by the tractor putting farmers out of work by huge crop surpluses. This recession is obviously causes by shortages of oil and huge population growths that keep driving costs of living up and up. From the looks of things, the situation may be hopeless.
Supply side is bogus. The economy is improved by smart spending and investing and not by how much of that is happening. That in turn improves peoples quality of life.
Tags: Economy
