Evidence of Deflation

Here is an article about companies cutting pay checks instead of jobs - More companies, such as Acco Brands, turning to pay cuts to avoid more layoffs. It has to be extremely painful for the employees, and a 47% pay cut for six weeks seems really bad, but it is allowing these companies to keep people employed. Again, anyone with debt will be hurt the worst. It is keeping people employed though, and hopefully allowing these companies to be prepared when the recession ends. And it will end eventually.

Here is the reason why - Economy Strains Under Weight of Unsold Items. A lot of overcapacity and inventory. We've been on a lending and buying spree for so long, everything is out of wack. Now that people are trying to pay off their debt, they are spending far less. Spending probably won't pick up until people feel comfortable with their financed, which means paying off their debt and increasing their savings. It's going to take a while.

I've been reading a book by Murray N. Rothbard called America's Great Depression. I'm just getting into the details about what caused the depression, but the main premise seems to be rapid monetary expansion and inflation in the form of banks loaning too much money to too many people. Back then though, it was the stock market everyone thought would go up forever, not housing. The result was pretty much what we're seeing now. I have yet to get into why the Depression lasted so long, but I have a feeling the main focus will be government intervention. Sounds familiar. It's all making me a little depressed actually.