Comments: A "Deflationary Spiral"?!

I like your explanation. Just a quick question: Could the same thing happen if the supply curve is getting shoved out? I don't know the figures, but purely on antidotal evidence, it seems people and businesses are still consuming, but prices for everything besides energy is dropping. So, what happens if the same amount of good "x" is purchased but we get a better product (we'll call this good "x+") for about the same amount of money or just a tiny increase in costs? Inflation is tough to measure in the first place when you try to account for improvements in quality. I mean, my toothpaste cleans, whitens and freshens! And if I buy a voice over IP telephone card, I'm definitely consuming more telephone service, but at a tenth of the price I used to pay through AT&T.

But it's especially tricky now that we have so many new goods each year. Mapquest is free, I use it often, and it's free! Poor map sellers. Do you think any of this hits at the source of the problems you describe? What are some of your favorite likely causes?

For your next entry, I have a suggested topic: jobless recovery - do economists just like to make up catchy definitions or is there something new here?

Posted by Teddy at July 2, 2003 12:45 AM

You does sound more and more like a economist!

Posted by Jacqueline at October 24, 2003 11:21 PM
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