Retail Sales shows that consumers are tired of borrowing and spending – the deflation is in control
Joe Weinman
Apr. 16, 2007

The consumers are still spending. They are tired though. They borrow against their homes to continue maintaining their standard of living. They borrow against credit cards and other loans. They take second and third jobs – 80% of the middle class families are struggling with more than one wage earner.

Retail Sales show that consumers are tired of borrowing and spending. No one understands that deflation is loud and clear but it is stealth if you try to find it in Government reports. The deflation is vicious. Borrow and spending is just a form deflation that eventually creates long-term depressions.

The budget deficit, trade deficit, collapsing social security trust fund, and Medicare mess are all part of the deflation. In 1985 when a Japanese financial columnist first talked about deflation, he was cornered and outcast. From 1988 to today, Japan is suffering deflation. The Japanese stock market since 1988 has fallen more than 70%.

The 1929 stock market crash and deflation as well as depression after that were real. Yet 1928 when a prominent economist first warned of the future financial meltdown and deflation, people called him insane.

The deflation right now has started in year 2000. It is real. It has caused massive shift of job and lowering of standard of living. But it is also for the first time accompanies with commodity inflation due to higher sudden temporary demand form India and China. Interestingly average Indians and Chinese are also in deep debt. The inflation finally got them too!

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