Sunday, December 16, 2007

Prices Will be going up Substantially after the 1st of the year and then Prices will fall, substantially, by the end of 2008

How can this statement be true. We have never retreated from rising prices in the past - what makes this different?


Stagflation begins with inflation driving the economy into recession - lower productivity, consumption, more than normal announcements of layoffs, higher unemployment etc. eventually leading to deflation - lower prices until consumption resumes. This has a greater spiraling effect than most other forms of economic change except maybe a Depression.

How do we deal with this best - in our own economic situation:
1. Take the "wants" out of our spending and move into "needs" category
2. Accumulate Cash
3. eliminate unnecessary automatic payments
4. learn to live with what you have.
5. Spend smarter - avoid known heavy increases if possible

No comments: