Deflation Explained

Here’s a video on MSN that gives another explanation of deflation and why Bernanke is so concerned about it.  This might be a little hard for some to follow; the short explanation is that deflation makes people delay purchases as they wait for prices to go down.  It also raises the real interest rate so businesses delay borrowing for expansion.  Deflation is not a real issue right now, but it certainly is a real and scarry prospect.

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