North County Jim – Could you give more info about deflation? Maybe we need a thread on that topic. Dr. Faber says we can have inflation and deflation. I don’t know what we have for sure: I see prices rising all around me: inflation. Then you make a good point about credit contracting: deflation. I know Bernanke is worried about deflation, and Mish at globaleconomicanalysis.com is sure about it too.
How will we know that we have deflation? Wouldn’t prices have to start falling?
Bugs – why will the lenders go under when foreclosures rise? Didn’t they sell the loans to investors? I think the lender problem has more to do with falling sales, but I am not sure. Which lenders keep their loans?