Reply #14: I agree with this -- falling prices are not "deflation"

[GliderGuider]

Falling prices are a lagging indicator of deflation, which is be definition a reduction of the money supply. Since the global money supply consists mainly of credit and its inverse, debt, any widespread liquidation of debt or reduction of credit is deflation. The collapse of the world's stock markets, the evaporation of toxic derivative "assets", all contribute to the deflation. The drop in home prices and oil prices is symptomatic of deflation, and should not be confused with the actual deflation itself.

This is a truly excellent article, one that should be read carefully and thought about deeply.