When the financial experts talk about the threat of inflation, we all understand what it means: prices are going to rise. But few of us really understand what deflation is and what consequences it brings to our economy. The author says that when prices begin to fall, people stop buying non-essential items. Even though we are not experiencing deflation now, it is evident that people do not want to buy houses because they fear that falling prices will eat into their equity.



The Fed's job is to make sure that we do not experience deflation and too much inflation. Currently future inflation is more of a concern because the government pumped so much money in the system.



- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market