Kwep. I think you’ve hit on what I’ve been thinking as well….we’ve just been through the incredible credit bubble and that WAS the inflationary period. And now we’re headed back to the mean. Since it started, big time in 2002. Then that’s the prices we’re headed towards and we’ll probably over-shoot as most reactions do.
Think about it. Wages did not grow, but the availability of money grew exponentially as debt. The economy was growing entirely on debt to a level where the debt could no longer be sustained. But this was hugely inflationary as it allowed all that extra currency to chase goods and services. Now the debt is going bye-bye and we’re left with real wages to support the price of goods and services. Hence we’re in deflationary pressure. And this feeds on itself as people are unwilling to spend and dont/cant borrow. As well as lenders are hesitant to lend since they just experienced defaults and huge losses. Throw in unemployment fear, and we’re going down this path for a while yet. IMO.
