Griffin Snow - Chapter 10

The chapter talked about inflation and the importance of the federal reserve in our economy, but the most interesting part of the chapter was the beginning of the section of deflation. Wheelan talked about the economic death spiral, and how consumers watch there total value (including house, cars, etc.) go down, while they still have to pay the same price for their mortgage. They are becoming poorer, and they know it. Paul Krugman spoke about the cycle of a depressed economy on page 238. He said, "Prices are falling because the economy is depressed; now we've just learned that the economy is depressed because prices are falling. ...Falling prices and a slumping economy feed on each other, plunging the economy into the abyss." Without help from the government, we would continue the downward spiral.