Mechanics of deflation

In order to have deflation, there must be a contraction of credit. We have seen consumers use less debt, along with rising fees and interest rates. Now, the debit cards are getting in on the act. If nothing else, it is safe to assume that rising debit card fees will cause customers to use their cards less or cancel them completely, leading to reduced velocity of money. Citi Follows Bank Of America In Instituting Debit Card Fee, $1.9 Trillion In Deposits At Risk Citi and BofA will charge up to $5 a month for debit cards. ZeroHedge takes stretches this into potential bank runs and certainly some consumers may move to smaller banks. However, the definite effect will be reduced consumption as consumers see their ability to spend slowed.