Lately, as the economy continues to decline I have seen more and more of this, my friends, and friends of friends, and pretty much everyone else I went to college with who managed to get a job post graduation are now facing layoffs.  These are all people with a graduate education, but given that the economy is loosing half a million jobs a month, and last hired makes you the first to get laid off recent grads (within 2 years of graduation) are being hit hard.  The bright side in all this is that having a college education still makes you far less likely to be unemployed (unless of course you are in the finance, or real estate industry). The reality is, and this is something that has surprised me, a number of my friends who have gotten laid off managed to find new jobs within a few weeks, and a few even got a raise!  And what’s more, some sectors seem to be far less susceptible to the downturn we are having, and a few sectors such as parts of IT, online development, e-commerce are still expanding and are still hiring. So there is some cause to be optimistic!

So the question you might ask is, what is there to do for the rest of us? What can one do if they just graduated from college and have no experience, or what can a person who just lost a job in an industry facing a severe downturn do? The answer is simple! Well OK, not simple, and not easy, but few things worth doing in life really are…

This is probably the best time in many years to start a business, to be an entrepreneur, to follow your dreams, to build or create something new.  Some of the bluest of the blue chip companies we know today were founded during the Great depression, (Boeing being one). Others, such as Coca-Cola took advantage of the depression to codify their brand in the minds of Americans.  What is more, the current recession seems to have significant other advantages for those of us looking to start a business, one being that the barrier to entry, to many businesses has disappeared.  Years ago, if I wanted to start a newspaper I would need significant resources, today I can start a blog for free. If I wanted to produce documentaries, I had to have a studio; today I can do it with a digital camera and youtube. If I wanted to teach anything I had to have some type of resources to get started- today I can use my webcam to create lectures on any subject, from philosophy, and teaching Chinese, to quantum physics, and I can promote these lectures through video sharing sites and my blog, once there is a following for my lectures I can institute a small fee for the more advanced lectures (while continuing to provide the beginners lectures for free).  I can open up a store, or sell widgets online for very little, if any start up cost, and given that we are all looking for ways to save money more and more of us are turning to the internet to purchase our widgets.  The possibilities are really endless, restricted only by your interests, and your creativity.

The point I am trying to make is that there is more than one way to look at this recession, one way is to look at it as years lost, another is to look at it as an opportunity to make a name for yourself, or to grow a business, and this way when we come out of this recession you will be in a stronger position.

This is great advice for students and those with few responsibilities, and I understand that for many of us we need to have money to pay for the kids’ new clothes, and for the mortgage. So to those of us out there with responsibilities, my advice is this, continue networking, continue looking for a job, sending resumes… but instead of doing that for 8 hours a day, do it for 6 hours and spend the other 2 hours on some of the other ideas that you might have.

In recent days I have had a discussion about deflation with a number of my friends and family. I understand that this is not a forum where I am free to discuss anything I want, free to stand on my soap box; this is a blog with a purpose, to help people save on books. But the issue of deflation is important, and will have an impact on the lives of college students, and therefore I feel that I have a responsibility to spend some time on this topic.

Deflation is something that is bound to affect college students, both positively and negatively, and even though such an environment will most likely lead to cheaper books, in the end deflation, though a necessary part of our economic system, is not a good thing.

So what exactly is deflation? Sticking with the overall theme of this blog, books, I will use a bookstore as the main example here. Deflation, simply defined, is the opposite of inflation; inflation is when prices rise (that text book cost $100 last year, and this year it costs $120), subsequently deflation is when prices, in general, fall down (the textbook cost $125 last year and $110 this year). The problem with this is that when we are in a deflationary cycle consumers do not shop because they are concerned that they will overpay for the specific item, and they are constantly waiting for the price of the item to drop. This drop in demand leads to an increase in supply, which leads to companies producing less goods and services because there are fewer people buying products, and which inevitably leads to these companies having to layoff workers. This trend causes an increase in the overall unemployment rate, and since unemployed workers cannot purchase many goods the fear is that this cycle is a self perpetuating race to the bottom. Japan was in a big deflation cycle at during the 90′s and early 2000′s and the Japanese people found that it is very hard to get out of deflation. Deflation is not to be confused with desinflation, which is simply a lower inflation rate (often close to 0%).

Admittedly this is bad enough on its own, but my personal fear is that the governments attempt to preempt this current deflationary cycle, by flooding the market with dollars – just yesterday the congress announced that they will pass an $700 billion dollar stimulus bill – will lead to an increase in the availability of Dollars, and this to inflation. Remember, deflation is bad, but uncontrolled inflation is as bad if not worse.