This is a portion from an article in the MarketOracle, back in November 2008 which speaks about deflation and what is happening to the economy. The entire article is very interesting reading. " The Dreaded “D” Word.Suddenly, with prices of many asset groups dropping rapidly, the dreaded “Deflation” word is popping up everywhere. Google “deflation” and you'll find 3,570,000 results.The prospect of Deflation strikes fear into the hearts of Central Bankers because once it becomes entrenched and prices start falling across a broad range of assets, products and services, nervous consumers pull back on spending in anticipation of lower prices in the future. This in turn sends the economy into a deadly downward spiral that sees businesses close down and unemployment skyrocket which in turn drives prices of most things relentlessly lower in a series of vicious feedback loops".Robert Prechter (who has long been warning that deflation was inevitable rather than hyperinflation...which will likely come later) is more confident than ever that “ DEFLATION IS WINNING”. "The Other Dreaded “D” Word". "Nobel laureate economist Paul Krugman recently stated there were very strong parallels between the Great Depression of '29 and the present financial crisis.... “What we learned 70 years ago, and then kind of forgot, was that capitalism needs regulation and management...This is not your father's recession, this is your grandfather's recession”.Even president-elect Barack Obama is aware of the problems that lie ahead when he warns that the financial situation is “likely to get worse before it get better.” Perhaps a lot worse".http://www.marketoracle.co.uk/Article7585.htmlA close friend who has been in the insurance industry his entire career and a top notch actuary explained all of these issues to me in layman's terms to better understand what was going on. The first thing he relayed was AIG went down due to de-regulation. Since insurance companies basically hold up all other industries, if that hadn't been handled, the consequence would have been horrendous. The rest of the first bailout though was not done wisely, nor did the companies that got the money, do what they were suppose to with it. He further explained that when running an actuarial cost/risk ratio analysis, that sometimes the risk of doing nothing far outweighs the cost of doing something. Sometimes money has to be thrown into a situation in order for there to be a gain.I'd rather a big chunk get put out there (properly this time) to plug the hole while other measures are taken, instead of leaving our country sinking in the quicksand.An older Independent