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To: Maurice Winn who wrote (19627)	12/13/1998 11:27:00 AM
From: Jon Koplik	Respond to of 152472

Re : Don't worry about a deflationary spiral. This is all good news. Cheap oil is good. Cheap ham is good too. Cheap food is good. Just a reminder to those who don't eat, drink, think, and sleep economics and finance theory -- the "flip side of the coin" (on those great (for consumers) low prices) is that a lot of debtors will soon start defaulting on their borrowing agreements. When a creditor gives up on collecting (in full) on a debt, and writes it off (or, writes it down in amount), this is a clear cut example of deflation (or, at least - deflationary forces at work). The assets and liabilities "out there" have shrunk, due to a recognition that the debt will not be paid as previously agreed. Money supply will shrink, as the banks start doing the reverse of the old "multiple expansion of whatever" (which is explained in beginning macro economics courses (and, does make perfect sense)). In short, these plunging commodities prices do have consequences which should be considered in addition to being thrilled that XYZ does indeed now cost less. Jon.