Companies are fighting for every penny of revenues they can get. Competition, while good for consumers, is killing most businesses. Prices are dropping in almost every industry due to competition. Deflation by itself can be benign. But couple it with an economy loaded up on debt and it spells disaster.
Deflation keeps pressure on revenues while eroding profits.
But the debt side keeps costs up, squeezing profits further. Competition from overseas can cut prices while domestic producers struggle just to make the next interest payment. Liquidity and easy money were the ice cream and fudge the Fed has been feeding this spoiled economy. And it keeps asking for more. When Greenspan takes the desert tray away from the American economy, it is going to suffer some pretty bad sugar withdrawals.