Sunday, December 21, 2008

Cool Checks in Deflationary Times

By Jasmine Croop

Cool checks into the economic situation is the barometer of inflationary vs. deflationary. People are often confused about the times they are living in and make poor economic choices.

If the pervasive economic condition is deflationary, goods and services become less expensive. The value of the dollar increases. Many cannot grasp that relationship.

Opposite of inflation is deflation and with deflation, most assets decline in value. You see the value of your home decline in value as well as gasoline. Corporate equities, mutual fund shares, insurances and pension reserves and equity in non corporate business decline.

The United States Dollar, however, is increasing in value. By definition, deflation means the dollar is going up in cost.

When the price of the United States Dollar increases, it also increases against foreign currencies. The dollar buys more.

Everything is costing less. The guage of value of a particular currency has nothing to do with how their economy is doing. The value of a currency is base on how it compares with other currencies. You can't evaluate a currency in isolation.

When goods and services cost less, you're living in a deflationary environment. The United States Dollar buys more and the cost of the U.S. dollar abroad increases also.

The European economy is collapsing and the least worst currency worldwide is the buck . Your cool personal checks: for a safe place to keep your money is in U.S Treasury Bills.

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