The true fix too all the problems is to lower the mortgage rates to the same 1% the banks and lenders made this mess now its time for the government to step in and say enough allready. Mortgage rates are 1%. Banks deal with it.

t.d.   you hit the nail right on the head.  Not only are the banks overcharging all of their customers they also are hoarding cash that has been infused into the system by the tax payers.  It would be smart for all citizens of the US to admit that we need to flush our intire political system down the toilet as it is full of corruption by both republicans and democrats alike. It is crazy for anyone to think Mccain or Obama can make any difference when we have crooks in congress and the senate.

It isn't deflation when prices drop to levels reflecting the unmanipulated value. Prices last year were artificially high and not in fact based on fair market value. Therefore, prices returning to levels reflecting the actual appreciation curve are not deflationary, but rather a correction. Simply because prices are lower one year from the last, it doesn't mean deflation is occuring when unnatural market forces pushed prices higher to begin with.

T.D.,

Where do you get your 500% number?

This is what happened to Japan in the 1980's and 1990's-they actually had 0% interest rates.  And we all saw the tremendous deflation, not disinflation, that country suffered.  We have already seen that in real estate prices here.  Oh, and the Nikkei index of Japan is still nowhere near its all-time high, either.  I think this is something to be highly concerned about.

As for electing one candidate or the other as President next Tuesday, I am going to assume the writer in question was simply being facetious.  Look at all the different political leaders Japan has had in the last twenty years (about when their economy began heading south): did any of them make a seious difference in the health of that country's economy?

 Bernanke can, by edict, manipulate short term interest rates to zero, but to manipulate long term rates the Fed will have to buy back long term bonds, thereby injecting more cash into the money supply and making the U.S. the next Weimar Republic. It is Greenspan's cheap money policy of rewarding spending and penalyzing saving that has got the U.S. into this mess and Bernanke is following the same disasterous path.

 How can "deflation" be all bad when asset inflation/bubbles is/are a major part of the problem ? Let commodities (including oil and housing) fall until the U.S. consumer can afford to live. Let the U.S. dollar regain its earning power. It is supposed to be the Fed's job to keep inflation low and steady, not create a roller coaster ride of rapid inflation and deflation.  Bernanke, like Greenspan, should spend his evenings re-reading his economic textbooks and stop attending the Washington/NewYork cocktail parties.

 Japan is the modern day example of a stubborn low rate monetary policy. For 20 years Japan has kept the cost of short term money low. This has allowed other country's banks (think Lehman Brothers) to borrow cheaply in yen, convert to U.S. dollars, thereby holding down the true market value of the yen. This has supported the rampant speculation in New York and London, while keeping Japan's exports effectively subsidized.

 With the Nikkei (the Japanese Dow) peaking at 39,000 and currently around 8,000, does anyone seriously believe that "true" asset values have deflated 80% in Japan, or were nominal prices simply ridiculous 20 years ago.

 If Bernanke keeps short term interest rates low (or even lower, like, say zero) then he will reap the whirlwind later.

Kevin

P.S. Has anyone noticed that the world did not come to an end, even though little of the $700 billion bailout has been spent yet. How much longer are the American people going to listen to the drum beat of crooked investment bankers and their paid up lobbyist- Hank Paulson ?

Will this affect my C.D. which is set for 4 yrs at 4% for a monthly  Income stream?

Will this affect my Annuity, for a monyhly Income stream?

Hey Scotty, beam me down man. I would just love to have that guy in Canada to clean up the mess made by Harper and his wingnuts. On the other hand, you need Obama more than we do: you have a nightmare to solve down there.

Or maybe you deserve what you got for voting for Bush, eh? Naw, I mean, anyone who voted for a moron who says "the thaw took  a while to thaw so it will take awhile to unthaw" actually needs some pity.

When you elect Obama, we will let you back into the civilized world. We're empathetic like that, us Canadians. Comes by being first into both World Wars or something. By the way, we are now the leaders of the "free" world: you seem to have lost yours. "You betcha"

Forget about mortgage rates, have you seen what is happening to the interest on your savings accounts and CDs? If they drop much more there will be no point in bothering to save at all, might as well put it in a jar and bury it in the back yard.

Dear Julianna:

If it is a true annuity paid by a solvent bank, you will continue to receive your payments. The only effect you will see is external, such as falling prices in the short term, and rapidly rising prices long term on anything the crooked hedge funds can speculate on and trade amongst themselves. These rising prices will depend entirely on whether all the money is borrowed, printed and spent that the Paulson/Bernanke crew has ear-marked.

  Remember, if the Bernanke/Paulson crew achieve their objective of saving their crooked friends on Wall Street, then inflation will again rise faster than middle class incomes, as these crooks take government money and guarantees and start some new pyramid schemes or bid up commodities (like oil) since even an idiot can make money when they can borrow at 1%, have their transactions guaranteed by the government, can hide their transactions off-balance sheet, and can leverage more than 50 to 1.

 If regulations for complete transparency on derivatives, and all off-balance sheet items are not enacted, then the next time these crooks on Wall Street and their minions in Washington, get America into a mess like this again, there will be a revolution.

 Even McCain and Obama bought the sucker's story when Paulson, Bernanke and Bush told the American people that the sky was falling and $700 billion would be necessary to save their friends.  Now that the Federal government owns and has guaranteed every financial institution and transaction, perhaps it will become apparent to someone in Washingtion that the American people, for once, control Wall Street, and not vica versa.

 Good luck-you will need some.

Kevin Em