Deflation would have dire consequences
The Federal Reserve members are waking up to the real danger to our economy.
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This week’s drop in the consumer price index has raised the specter of “deflation.” Deflation is when money gets scarce and, therefore, more valuable. The price of goods will fall to try to match the new reality, but deflation is the enemy of anyone who has a lot of debt to service. Debt service is agreed upon for the long term and as money gets scarcer it just becomes more difficult.
It shouldn’t be a surprise to government regulators that deflation was a distinct possibility; it wouldn’t have been had they been looking at the middle class. For years, while the administration unsuccessfully practiced trickle-down economics with their tax cuts for the rich, the members of the middle class were losing earning power and asset value. Trillions of dollars of middle-class assets have disappeared with the housing and stock market collapses. Most members of the middle class have no purchasing power left when they consider their debt load. They are now against the wall, looking for food and shelter, the basics only. Trying to keep the kids fed and warm.
The corporations and governments who need the middle class’ money to service their own debts may also get caught up in this deflationary price spiral. Without significant changes, expect massive cuts in the amount of stuff on the store shelves and in the government’s bag of services as these entities begin to suffer along with the middle class.
The solution is to get money to the middle class while at the same time building an economy and infrastructure that is appropriate to the world in which we live. Middle-class debt should be on the government’s front burner.
Building a sustainable economy based on community principles with distributed and renewable energy sources and high-speed information services for every U.S. household could be the work projects that supply the wages that make our country a better place to live with a working economy again. The sooner this can be started, the less deflation we will have to contend with.
MICHAEL TABONY
Gladstone
Keep it blocked
In response to a Nov. 26 letter about the blocked lane on the overpass where Timberlake Road crosses the Expressway, I think it’s safer with the lane remaining blocked permanently. I have used this overpass five days a week for seven years. The problem I have experienced is the traffic coming onto Timberlake Road East from the Expressway uses the closed lane for an acceleration lane and refuses to yield to eastbound traffic on Timberlake Road that desires to exit onto 501 North. I’ve had many near misses trying to exit onto 501 North from Timberlake Road.
RALPH SHEPARD
Lynchburg
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