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If you are seeing prices falling for goods that normally don't drop in price, I think that would be a warning signal. What's a little more concrete signal that we may be entering a deflationary period?

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The Federal Reserve would probably know that deflation was coming and would lower the interest rate it charges to member banks.

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How about before the Federal Reserve lowers the rates? How would you know before they did (I'm not saying it is easy). – David Smith Nov 6 at 0:40

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