2009 Economic Year in Review: How Did We Get Here?

Hale "Bonddad" Stewart
HuffPost
(Part 1 of 2)

Because we are approaching the end of the year, it is appropriate to take a look back at the economy for the last year to see how we're doing. This will be a two part series. The first is, "How Did We Get Here?" It will be a retrospective of the economic numbers for the collapse. The second part will be a "Where We Are Now" piece which will show, well, where the economy is now relative to where we were about a year ago. So, let's get started.

The fall of 2008 was marked by panic. After the fall of Lehman Brothers, there was widespread talk of a "deflationary spiral," which is:

... a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price.[7] Since reductions in general price level are called deflation, a deflationary spiral is when reductions in price lead to a vicious circle, where a problem exacerbates its own cause. The Great Depression was regarded by some as a deflationary spiral. Whether deflationary spirals can actually occur is controversial.

Here is a chart of the year over year percentage change in US inflation for the last five years: