These are indexes that show that deflation is occurring:
1. Technology in general. Moore's law states that computing power doubles every two years. It is not directly about price, but prices per gigabyte or other measure decrease every year.
2. Gold prices, as shown by the massive dropoff on April 12-15, even though prices have recovered a little since then. The price of gold was almost $1800/ounce just 6 months ago.
3. Military spending. It was over $700 billion 2 years ago, but may be $620 billion in 2013, and it will continue to drop until 2016.
4. Overall government spending. It was $3599 bn in 2011, and 3538 bn in 2012, although it is expected to be 3685 in 2013.
5. M2 less monetary base. I recently posted a chart about this.
6. Import prices. (On Fred - Import: All Commodities (IR)).
7. Crude oil prices. They were over $110, but now are under $100/barrel. Oil production in North Dakota and Texas is booming, but the demand isn't there.
Why are real estate prices and the stock market still rising? Because of QE4 or whatever this is. The money has to go somewhere. As soon as the Fed stops the flow, the stock market will crash.
Deflation makes debts more expensive to repay. Once deflation sets in, it spreads. I think deflation is a good thing. It is like losing weight. Every so often the economy has to go on a diet.
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