As economic troubles stops flare up around the globe, the earning estimates of American firms who do business abroad begin to flatten. Without these international consumers to buy their products, there are fewer sales, which means that inventories pile up. When there is more supply than demand, prices go down. Lower prices would normally cause demand to pick up, but in an uncertain economy people tend to postpone purchases. We see this tendency in the American economy with computer products where consumers believe that the prices will go down if they wait another six months, so they decide to hold off. This tendency causes further gluts in the market, which eventually leads manufacturers to slow production. They lay off workers, causing domestic consumption to fall further since there is less money to buy goods. These effects ripples throughout the economy and create a deflationary spiral that can lead to a recession or even a depression.

The Financial Crisis Inquiry Commission has been called upon to examine the financial and economic crisis that has gripped our country and explain its causes to the American people. We are keenly aware of the significance of our charge, given the economic damage that America has suffered in the wake of the greatest financial crisis since the Great Depression. Our task was first to determine what happened and how it happened so that we could understand why it happened. Here we present our conclusions. We encourage the American people to join us in making their own assessments based on the evidence gathered in our inquiry.