The causes of deflation are linked directly to inflammation and the only cure for inflammation is a deflation. The following is a list of causes of deflation and manifestations of deflation leading up to the GREATER DEPRESSION that started in 2000 and may not end until 2020 (end of the mania).
When seeking the causes of deflation we need to remember that the real cause was credit inflation. Many items on this list are manifestations of the credit bubble popping. What is remarkable is the depth and number of related items on the list.
1. Growth of government at all levels federal, state, county and city. Money sucked away from the market economy to fund inefficient and bloated programs reaches one third of the economy and then causes it to get top heavy and crash.
2. Military waste. Wars and much of the money spent by all the different divisions of our defense departments is beloved down a whole in the ground-never to be seen again. Oil, food, materials, manpower, blood and lives.
3. Governments support of (favorite) industries that would not make it in a free economy. Real estate bubble – unwinding lending practices.
4. Real estate deflation leading to reduced wealth and reduced taxes to government due to lower revenue from both capital gains tax and real estate property taxes. 90% drop by 2018
5. Stock market losses. People feel poorer so the do not spend. Pension and retirement accounts lose money on stock and bond investments hurting ability to pay those retiring. 90% drop.
6. High petroleum prices sucking money out of peoples pockets that could have gone to purchasing goods and services in the market. We are all on an oil food chain using dead dinosaur deposits for our energy instead of whale blubber like we we used to. Money sent to foreign entities that in some cases is used to pay for attacks on us. Inefficient gas guzzling autos, appliances, lighting and phantom loads on TVs, computers, microwaves etc. Heat rises right? Why is the working parts of refrigerators underneath the area meant to be cooled. Heat rises up through the whole refrigerator or freezer box. A waste of trillions of dollars in oil all these years.
7. Job losses – high unemployment means less money is around to buy goods and services. Causes businesses to layoff more workers in a vicious cycle snowball effect.
8. Collectibles, antiques, art and possessions in general losing value. Lower prices when people try to sell. They feel less wealthy and can not buy as many necessities. There will be many bargains in all kinds of property and possessions at the bottom as people sell assets to stay alive
9. Credit tightens up. Bank and lenders fears lead to strict standards. Low interest rates are a sign money is on sale. It is a sign of weak demand and deflation. 10.The internet. Lower cost of doing business online means it is easier to start a business. Business and jobs …