By: Robert Thomson

Almost everyone knows about inflation and the troubles associated with it, but comparatively few people are familiar with deflation. This is fairly understandable, as the U.S. has not experienced deflation since 1955, until now.

Take a look at the skyrocketing rate of deflation over the last four months:

Mar -0.38%
Apr -0.74%
May -1.28%
June -1.43

Note how the rate of deflation increases every single month. That’s a dangerous pattern brewing.

The Effects of Deflation

In a deflationary economy, prices continually fall. This sounds good, right? Well, maybe not so much. Wages tend to fall as well, but not all prices fall. In particular, the payments on home mortgages do not fall. You could end up taking a pay cut at work and losing your home because you can no longer afford your mortgage.

The perfect strategy for a deflationary economy is to not spend money. In an inflationary economy, every dollar you own is worth less every day that you own it. In a deflationary economy, every dollar you own increases in value every day that you own it. You become richer by just not spending money. Of course, you can also invest that money to further enhance your wealth building.

Put more simply, in an economy where prices are constantly falling, it makes sense to delay purchases as long as possible. Why buy a truck for $24,000 today when you can buy the same truck for $23,000 next month?

This behavior terrifies liberal economists, because they incorrectly believe that consumer spending creates economic strength. They believe that American consumers can spend their way to riches. Obviously this is not true, but consumer spending can make an economy look better in the short-term. Liberals don't want you to save and become wealthy, they want you to spend your hard earned dollars to "stimulate the economy" buy buying a bunch of stuff you don’t need.

Don't fall into that trap. Save your money and invest it wisely. Make yourself wealthy and you will help make the whole nation wealthy.

Inflation is Coming

The current deflation won't last forever. The federal government is printing money faster than at any time in recent history. Keep you eyes on the monthly inflation reports and be ready to change investment strategies when our current deflationary recession becomes a hyperinflationary depression.

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Will Spencer is the author of Deflation and Barack Obama's Birth Certificate.

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