I pulled this question/answer blurb from By Kimberly Amadeo,

Question: What Is Deflation?
Answer: The definition of deflation is when asset and consumer prices continue to fall. This may seem like a great thing to consumers, except that the cause for deflation is a long-term drop in demand. Unfortunately, a drop in demand means that a recession is already underway, with job losses, declining wages, and an ongoing decline in the value of your home and your stock portfolio. Deflation is a result of businesses dropping prices in a desperate attempt to get people to buy their products.

So this is where we are headed and we will be learning where the rubber will meet the road on consumer goods. How low companies are willing to go to move their goods or services in this economic environment will be the question. What we have been hearing is that people were expecting to see deeper discounts when they went Christmas shopping this year. People saying, “well the retailers aren’t hurting too bad yet”. But look at the bright side there will be bargains to be had in this environment, if you have set up yourself up with the proper balance of debt, this may be an opportunity for you. That doesn’t mean go hog wild or anything, but if you spend wisely in this environment you will get the bang for your buck!


~ by debt2dreams on December 18, 2008.

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