Consumers are often confused about the economic conditions they are living in. Everything has a inner gut check about what they see their dollar purchase, and the extremes are that either they are living in inflationary times or a period of deflation.

If the pervasive economic condition is deflationary, goods and services become less expensive. The cost of the dollar increases and can purchase more goods. Many cannot grasp that relationship, especially when unemployment is high and dollars are difficult to come by.

In a deflationary environment, the worth of almost everything decreases. Your home decreases in price; the value of gasoline, goods and services come under pressure. The value of stocks and hard good assess decreases and you simply get more purchasing power with your dollars.

There is only one exception; the buck goes up by definition. The opposite is true. When the cost of goods and services goes up the level of value of the dollar shrinks.

When the value of the U.S. dollar goes up, view from the United States perspective, inevitably it goes up against other currencies. When the dollar buys more its cost starts rising and acts like a magnet.

Review the accounting of your personal purchases. Are you getting more for you money? Is gas costing less, can you buy more home than you used to and are you getting better deals in the stores? You may see dollar credit drying up and the value of the dollar going up across the world.

If most things seem to cost less and your paycheck is able to buy more that means you are living in a deflationary environment. If the price of goods and services are going up, you live in inflationary times. As inflation increases ones paycheck is able to purchase less and less.

Treasury bills would be the safest investment in deflationary times. Worldwide currency shifts would acknowledge the U.S. dollar if other currencies fared worse in comparison. This would make the dollar strong and worth more overseas. At home it would buy more goods and services.