Saturday, April 11, 2009

Deflation Continues To Raise Its Ugly Head

US wholesale inventories, a measure of lag in demand relative to expectations, fell for the sixth month running in February as companies continued to slash stocks amid weak demand.

This is what I'm talking about. It's not that people don't want to buy. The willingness to buy hasn't changed. It's the ABILITY to buy, whether it be through wages or credit, that has been damaged here. Households based on 1975 wages require more and more credit to make up for less and less buying power as costs rise. These costs would not have continued to rise if this credit wasn't being introduced into the economy in the first place.

We will continue to see costs melt down until they reach...what else...1975 levels! Why is that so hard to believe?

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