Consumer prices fall = time to party!

Reports today that consumer prices (excluding food and energy) declined for the first time since 1982 have me wondering:

- Doesn't consumption = demand? And doesn't an abundance of demand = price increases? Arguably, the only thing we've produced in ample supply since 1982 is rampant consumption, given peak consumer debt, high unemployment and a shortage of talent on the world stage. It had to end, and when it did, prices had to fall. So what part of this surprises?

- Does the data suggest that this recession has been deep and long enough to influence the behavior of two generations of American consumers? Or is it anomalous? Will the debt cult recover, so that the relentless price climb can continue?

- Excluding food and energy seems to me to be like excluding oxygen as a life-force. Who has used credit at the grocery store or the gas station? It's the way of the household, and it's the way of the nation. 'Nuff said.

As long as consumption increases and resources are constrained, prices will climb. The question, then, is on what? Health and welfare? Basic needs? Debt service? Uhuh.