Casey

I do not see an either or when it comes to inflation/deflation. Certainly as discretionary income drops as a result of the continued weakness in housing prices and the impending downturn in the stock market luxury items will drop in price.

Good old supply and demand will dictate where prices go ... as the value of the US$ erodes, and it will as more money is printed and less confidence exists, which will be further exacerbated by the possible/likely move away from it's status as reserve currency and use in international trade imports to the US will go up and export prices will go down.

More importantly will be the behaviour of concumers and the failing of business and the loss of production/ as investment/jobs erodes.

The other factor of course is rising oil prices which cause everything that is transporte to increase in cost. Buffet's bet on the railroad is a bet on higher energy costs.

IMO necessities will increase in price ... luxury goods deflate drastically and we will have shortages perhaps rationing of some goods. The US is no different then any country in histroy when they fall in fact the bigger they are the harder they fall and debt levels has choked the life out of the economy and the fact that the antedote is more debt (that is taking a person who is belleding to death and cutting them elsewhere rather than applying pressure and t sitching them up). Also interest rates have nowhere to go but up and that just means more money in the future goes to paying off debt or a financial defalut ... whichever way ... the party is nearly over and devestation is not far away.

orgy