Deflationary Death Spiral

Consumer prices have fallen more than ever since 1947. Well, that is scary, if the U.S. goes into a deflationary spiral- as did Japan in the 90's, then the game is definately over. Japan's deflationary cycle destroyed Japan as a world economic power, and extinguished its rise in the late 80's into what people mistakenly thought was going to be become the next world superpower.

However, LNR does not believe that the U.S. is in a broad-based deflationary cycle yet, the records reflect a huge drop in oil and real estate prices. Obviously products related to housing- i.e. home improvement, furniture, etc. might reflect small decreases in prices, but, as of yet, deflation is not broad based. This is all the more why the new administration must create a massive five million (5) job program through government hiring (for infrastructure) and massive contracts to the alternative energy industry- creating enormous wind and sun power farms across the sun belts. This, ONE key program- of jobs- can prevent a deflationary death spiral.