Sunday, October 19, 2008

Deflation

Lower gas prices sound good...but, have you thought about...deflation.

Ugh....

"When prices start to fall because of lack of demand, they can go well below the cost it takes to produce products," said Bernard Baumohl, executive director of the Economic Outlook Group. "Companies have no alternative than to cut back production and lay off a lot of workers. That cuts demand more. You get this vicious downward spiral in prices."