We've harped on the theme of debt deflation many times in the past, but not recently because I had despaired of finding someone who could score any points taking the other side of the argument. Alas, now my best hope for a good debate, Fred Hapgood, has let me down. Briefly a teacher at Atlantic City High School when I was a student there in the mid-1960s, Fred has one of the most fascinating sites on the Web, and the essays he has posted there and which he also freelances to big-circulation magazines make for great reading. Unfortunately, he has not brought his considerable intellectual gifts to our years-long discussion of deflation. More to the point, our most recent series of exchanges has led me to conclude that his intention all along was not to debate the issue, but to wheedle me in countless trivial ways. You can judge for yourself, since I've reprinted below key excerpts from our most recent series of e-mails. He started things rolling this time by quoting a letter I'd written him in September, 2006. I had concluded at the time that the housing downturn had already set in motion deflationary forces from which the U.S. economy will not recover. I still believe that is so, as most of you will already know. Here is the latest point-and-counterpoint: Not in Kansas Rick: (writing in September, 2006): 'We're not in Kansas anymore, Fred. However, if this housing downturn proves to be anything less than The Big One, I'll have a lot of shutting up to do. Fred: (July 2007: It's been two (sic) years now. Long enough to make the point? Rick: For sure, Fred -- and I'm glad you've finally come around. We are in fact in the very maw of deflation. The problem, simply stated, is that we have a
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