Inflation?

Invictus has a good post over at Bondad's about those worried about inflation. I keep hearing the rightards trying to throw the fear cards at us once again about prices that will hit the roof and you'll need a wheelbarrow full of money to buy a loaf of bread. That won't happen for several reasons as he points out with his graphs and charts. The simple answer is this: Demand. With babyboomers poised to hit the gold watch crowd they tend to down size and hold the line on spending. That is based on the nagging fear in the back of their minds that they'll run out of money long before they take a dirt nap. You also must remember that these were the same folks who when they were in their 30s and 40s were able to pull us through the last economic downturns. They went from the beater cars they had in their 20s to the upscale sedans and SUVs to haul the spawn to soccer games. The boomers are downsizing and doubling up or worse trying to split the rent with their parents that is if Ma and Pa didn't move to a retiremnt community in Az. If the spawn didn't find a career path then they're comming back home to either share with the bills or worse become a fungus on Mom and Dad. That is if Mom and Dad didn't split before the meltdown hit. If they didn't they can't do it now and are stuck with each other.

So inflation? No. People have come to realize that they can get by just fine without all the junk. What didn't get sold at the garage sale either gets donated or thrown out.

Inflation? computer says no

Update: Seems somebody is skeptical about my analysis. Well don't trust me then take it from an award winning economist.

From Paul Krugman Pop through some of the links in this article. He gives some very simple explainations that even a simple guy like me can understand.