Is deflation on the way?

[pscot]

This is limited and anecdotal but it's still pretty i8nteresting.

http://www.minyanville.com/businessmarkets/articles/deflation-pizza-hut-price-research-in/8/19/2010/id/29684

....Then yesterday, Minyanville’s Michael Comeau pointed readers to the price cut of Madden NFL 2010, which is made by Electronic Arts (ERTS). (See "Madden" Price Cuts Bad Omen for Electronic Arts). Amazon was at the center of this price cut as well. Offering the brand new Madden video game for $49.99, $10 off the $59.99 industry standard for new video games. Comeau also points out that GameStop (GME) cut the price of Madden as well.

Today Pizza Hut, a Yum Brands (YUM) company, is planning to announce price cuts on most of its menu's main items. According to the New York Times, medium pizzas will cost $8, large pizzas will cost $10, and specialty pizzas will cost $12. I remember when a large, two-topping pizza cost $19.99.

The obvious reason for the price cuts are changes in consumer behavior. Consumers aren’t spending like they used to because they're worried about a sluggish economy; so companies slash prices to entice consumers.

Unfortunately for inflationists (hand raised), this screams deflation. Deflation arises when heavily indebted individuals (or corporations/governments) are forced to reduce spending because their earnings and incomes are deflating. This leads to a default on debt.