So the deflationists were right

The Baltic Dry Index measures the cost of shipping by sea. All of a sudden, worldwide shipping has drastically slowed.

The cost of commodities like copper have fallen rapidly.

It has been clear for two years that an economic calamity lay ahead. What was not clear, though, was whether the bust would be accompanied by inflation or deflation. It’s now clear that, at least in the near term, the deflationists were right. People and businesses have stopped buying things, so prices are falling. Even the prices of many foods are falling. Credit has frozen, so this makes it even clearer just how much stuff was being bought with borrowed money.

Given the vast amount of government borrowing and “stimulus” that will be required to get the economy going again, it seems all too likely that, longer term, inflation will return. But for now, deflation is a fine stroke of luck. Now’s the time for people to think about what they need to get through the hard times ahead and stock up.

I’m even going to price copper gutters today. A few months ago, copper gutters would have been completely out of the question.