johngonole

Bullish Stance Is Wearing Thin

I have to agree. In Florida the construction industry is still worsening. This is only one sector but it will be hard for employment to pick up when important sectors are still slowing down.

I can only conclude that we must allow prices to fall. Expanding government debt only delays the process. We can't compete at current wages with other countries. Asset prices must likewise fall to stimulate demand. Stagflation will be the result of current policies. Deflation can be terrible. However if the deflation is caused by lower consumer debt (more savings), higher empolyment at lower wages, and balanced government budgets we should see more actual consumption due to lower prices, and thus higher employment and increased business spending. Companies are not going to spend money building their businesses without REAL demand. Demand from borrowed money is temporary and peoples memories are too fresh for those lessons to be forgotten so soon. Lower prices are necessary. We are doing exactly the opposite of what we should be doing. Prices would be must lower if not for the government interference.

Banks could suffer from the falling prices I realize this but perhaps they should. Let people who have saved their money actually benefit for a change from the saved money. This will encourage REAL demand.