Gary Shilling: The U.S. Is on the Cusp of Deflation

During the past two years, the U.S. Federal Reserve has been trying to ward off deflation. But now, Gary Shilling, president of A. Gary Shilling & Co and a well-known market bear, says in a video interview that the efforts have not worked and that the U.S. economy is entering a deflationary stage. Shilling says we should expect to have 2% to 3% annual rates of deflation per year for the next decade.

He could be right. Earlier this month, the consumer price index, which measures inflation, dropped by 0.1% in June following a 0.2% fall in May and a 0.1% fall in April. Shilling says that 53% of the components of the index, by weight, showed price declines on a year-over-year basis. That, combined with the country's massive government debt and consumer debt, makes the chances of deflation seem more likely and suggest that the Fed's efforts have not completely succeeded.




Many economists would argue that deflation is still not a real concern and that there has not been sustained deflation since the 1930s in the U.S. But inflation has been negligible over the past year and Shilling says that this low inflation could turn into deflation.

If that happens, a true economic recovery could take years. The reason: In a deflationary environment consumers begin waiting for prices to keep falling before making purchases. That, in itself, means that inventories begin to pile up and merchants are forced to cut prices to increase demand.

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glaspie2233

I agree with the person who posted that everyone needs to stock up on firearms and be prepared to use them. If a woman refuses your request for a date then shoot the witch. If someone has a different oppinion on politics then shoot the B. Make sure thst you have the largest cannon so no-one can overpower you. This is a great solution.

See full article from DailyFinance: http://www.dailyfinance.com/story/investing/gary-shilling-the-u-s-is-on-the-cusp-of-deflation/19561859/?ncid=webmail&icid=sphere_copyright

August 16 2010 at 2:29 PM Report abuse rate up rate down Reply
Gumby

Only airheads like Gary Shilling himself will see his head deflated a little..

August 06 2010 at 2:42 AM Report abuse -1 rate up rate down Reply
John

The "tea-party" has racist members....so does the N.A.A.C.P THOUGH! Worse yet obama and his old lady are racist.Read his books look at his church.bottom line America is white & black we rise or fall together.I know black soldgers willing to die for OUR country

August 05 2010 at 10:13 PM Report abuse +2 rate up rate down Reply
dandeeconst

Wow I posted here this morning, it sure is refreshing to see all of the "economists" on here blaming Bush. If Obama was really the savior why hasnt he just reversed things? Face it liberals, Obama is a poser, the man really is nothing but a stuffed shirt, all the more reason to be fearful, the man is a true mental lightweight. He is slick, do not doubt that, but only to the casual observer......and lazy ass couch sitting liberal. The best suggestion on here yet has been to read " One second after" Look it up libbies....Im tellin ya, buy a good firearm, lots of ammo and learn how to use it.

August 05 2010 at 9:26 PM Report abuse rate up rate down Reply
Richard

anything you print from HUFFINGTON I take with a box of salt

August 05 2010 at 7:57 PM Report abuse rate up rate down Reply
Chad

Obama is a disaster and the Dems have controlled Congress since 2006. Is the country better off today than it was in 2006? I think even you stupid libs know the answer to that one.

And why do people keep saying the Tea Party is racist? If you type it enough times you think that makes it true? I call BS. I just feel sorry for all black Americans who wanted a black president for so long...they finally get one...and he ends up being the worst president in American history.

August 05 2010 at 7:07 PM Report abuse rate up rate down Reply
John

any one who thinks the dems are better than repubs is as stupid as some one who thinks the repubs are better than the dems

August 05 2010 at 6:55 PM Report abuse rate up rate down Reply
wood48year

Anyone who thinks these conditions our society is in started with the Dems, must be retarted. Get the Dem out to put in racist tea party Repubs. Who put the country in the mess it's in. If I were a Repub I'd be mad that my elected officials didn't get anything done in a year and half. They look like fools. The party of No brains. Their hate for Obama is more then their love for their country.

August 05 2010 at 4:55 PM Report abuse -3 rate up rate down Reply
John

get rid of stocks go with bank loans,limited partnerships and bonds to finance business expansion. Tariff trade from countries that exploit 3 rd world labor.and manipulate currency. Remember deflation started with union concessions,from middle class working people.

August 05 2010 at 3:14 PM Report abuse +1 rate up rate down Reply
John

I can see it did not matter when wages "deflated" for 25 years our home values tumbled ,,,,so now stock markets,resale and manufactures have to follow to sell outsourced goods to the people who took pay cuts to keep their jobs from being out sourced. Investors corporate raiding greed is killing capitalism and ushering in socialism.

August 05 2010 at 3:02 PM Report abuse +3 rate up rate down Reply