The truth about deflation

In a couple of years when you get to the one remaining Home Depot in your area that has not closed you will find that it's crowed. As most of the goods that Home Depot sells are imported, and the dollar continued to decline after the current short term panic into dollars ends–and the impact of net negative capital flows exerts its natural downward pricing on the dollar–the wholesale prices Home Depot pays will not decline much if at all. The government will welcome the devalued dollar, as it has since 2002, because the inflationary impact helps counter the deflationary impact of debt deflation and helps the US export position. Wage rates will not rise because recession will have caused higher unemployment and reduced wage earner's pricing power. However, at that point there will be few stores (boom market in plywood to cover plate glass windows?) and two or three times as many consumers vying for the same goods, and the cost of imports is up because the dollar had depreciated further; prices may actually rise.