Currently, there is significant inflation and deflation in America. I’m going to give two quick examples on why this is happening simultaneously.
Inflation: There is significant inflation in the form of increasing the supply of funding. The government is doing a great deal of lending. Apparently the US government is issuing up to 75% of new mortgages.
Deflation: Due to globalization, wages are decreasing as companies are hiring overseas to remain competitive. For example, GM and Ford are boosting Mexico output With $26-a-Day Workers
Therefore, it’s important to be very specific when discussing inflation and deflation because both forces can occur simultaneously.
Further, the real value of currency and GDP are important variables when assessing America’s economy.
One of the most important variables is China’s willingness to subsidize the strength of American dollars by accepting increasingly devalued dollars as the real value of American dollars continue to decline.