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Oct 14, 2010

Deflation in US?

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This question seems to be very surprising but the possibility of deflation can't be completely denied in US. The banks in US are reportedly gearing up to face the possible deflation. The other day, the US Federal Reserve reportedly asked people to send more so that the possible deflationary situation could be avoided.

The deflation is a situation quite opposite to inflation. In general there is no situation of deflation at all, but the falling prices or very negative inflation could be termed as so.

During the Great Depression in the 1930s, US has witnessed the deflationary spiral. Bit higher inflation is always good for any economy.

The deflation would be bit a big critical time for particularly bankers, lenders and the stock market. Any impact on the US stock markets (DOW, NASDAQ), will have strong impact on the other stock markets in the world.


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