Deflation is an EFFECT of a bad economy, not a cause. When the economy is real bad, people must sell at really low prices (often below cost), in order to be able to sell.
How much more would you suggest that they lower taxes for the poor? As it they pay nothing. With regard the rich: How high do you believe is fair?
People have been living way beyond their means, spending way too much money loading up on shopertainment instead of spending time with family and doing stuff like social interaction and ending up with huge debts. This is a correction, the days of spending 200% income is done. I think the Last bubble has popped, with the exception of the college bubble.
I can't be fucked to read the whole thread -I just read the OP. I have a question for noobtrader. Do you live in America? If you do and haven't noticed how $1 will buy twice the merchandise that it would a couple of years back then you are getting ripped off. Deflation is a fantastic thing for savers and people not stupid enough to gamble on stocks and make the likes of the criminal Jim Cramer rich. What makes me laugh is that the governments have declared war on savers, but you know what -holding cash has been the best trade for more than a few years unless you are extremely lucky or some kind of genius.
Unfortunately, the USA is not a "saving" country. You know who is? China. Who benefits from deflation and who suffers? How do you pay back trillions of dollars of debt when the currency value is increasing?
Can you give some examples. #1 Food more expensive than 10 years ago. #2 Fuel more expensive than 10 years ago. #3 Healthcare more expensive than 10 years ago. #4 Transportation more expensive than 10 years ago. #5 College more expensive than 10 years ago. Housing is starting to correct but still more expensive than 10 years ago thanks to the Oversized McMansions. Yet wages have not tracked the increasing cost of living and the cost of education to attain a job, so what did people do? Borrow to make up for the spread. Now that credit is shrinking and Americans waking up to the fact that spending and spending with borrowed money makes no sense. Americans can declare bankruptcy to get out of this debt when deflation continues. And in fact lots of Americans are walking away from mortgages. My prediction is Deflation followed by Weimar Hyperinflation when the US is desperate to meet its debts to the world so just like Germany, they will run the presses and print dollars left and right. Phase #1 is beginning (Deflation)