The Deflation Monster Rears Its Head
The price of a gallon of gas in July topped $4 on average nationally – today it’s about $2. (Source Fox News 11/21/2008)
At that same time, commodity prices were peaking, causing food costs to push to all time highs. As a result, the Federal Reserve quit cutting interest rates, fearing that further cuts would lead to even more inflation. (I define inflation as too much money chasing after a limited amount of goods and services causing prices to rise. When the Fed cuts interest rates, the money supply is ‘loosened’ which means there’s more of it out there, potentially leading to inflation)
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