Today at TILE, we talked about the prospect of deflation in the economy. Is it really happening? Why does it seem economists and the markets keep changing their minds on the subject? What can even be done about it?

Imagine you are camping in a forest and you’ve made a fire to cook with – if it gets out of control, everything burns up and eventually you’ll have a problem on your hands. That’s kind of like rapid inflation. But if it burns out, you’ll end up cold, hungry, and probably pretty miserable. That’s more like deflation, and if there’s too much, it can be really hard to get that fire going again. In the world of economics, the goal is to have slow and steady growth – not too much and not too little. In other words, inflation is when the economy “heats up” – prices rise faster than the value of the currency being used to purchase goods and services. In contrast, deflation is when the economy “cools off” to the point where the world becomes too sluggish – prices of goods and services even start to contract, such that a vicious spiral of non-growth or negative growth can overtake us all.

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Today at TILE we talked about new financial regulation and how all the rules coming out of Washington will play out in the financial sector. What are all the new rules? Will they make banks and bankers act differently in the future? And is this good or bad for consumers of financial services?

As with any new legislation, the devil is in the details. Even the experts are trying to figure out exactly what is included in the new regulation bill. That being said, there are a few big categories: First, there’s the creation of the Consumer Finance Protection Agency. This agency will coordinate, review, and oversee financial rules related to consumers. Second, the Volcker rule (named after former Fed Chairman Paul Volcker) limits a bank’s ability to trade for its own account (aka proprietary trading) and limits the amount a bank can use for investing in private equity and hedge funds to 3% of capital – implying that banks should be focused on serving their customers versus making large bets for their own profit.

Third, more derivatives will need to be cleared through an exchange versus over-the-counter. In other words, there will be less trading permitted “behind the scenes.” Fourth, the SEC is going to review the standards and responsibilities of financial services providers. As a result, there will likely be increased legal obligation and responsibility for those servicing clients.

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I do most of my shopping online these days. It’s more pleasant than a crowded store, and an easy way to find great deals. Could it be… the perfect shopping experience? Well, when Team TILE sat down this week and talked about online shopping, we discovered some creepy and not-so-financially-empowered behaviors that had wormed their way into our otherwise pristine consumer lives. Have you ever purchased an item online within three minutes of learning it existed? Read on.

New ways of buying have made it easier than ever to lose touch with your spending. The Internet removed traditional barriers to shopping – when you can have literally anything delivered to your door for just the cost of shipping, it almost seems ridiculous not to, right? What’s more, you’re probably paying for all of those great finds with a credit card. But paying with plastic eliminates that important step in the transaction where you pull out your wallet and actually see what portion of your current net worth you’re about to part with. With credit cards, the hit to your checking account comes long after you’ve forgotten about that impulse buy. I am regularly shocked – shocked! – by some of the charges I find on my credit card bill each month.

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Today at TILE we talked about graduating from college and entering “the real world” with student loans on your balance sheet. As thousands of college grads begin making their first (of many) loan payments, that feeling of “free money” will quickly disappear. But how many people actually have those student loans? Are student loans better or worse than other kinds of debt? And how will today’s job market impact a person’s ability to pay down those debts?

Student finance is a big market. In the 2008-2009 academic year alone, students took out nearly $100 billion in education-related debt. And according to the College Board’s 2009 Trends in Student Aid report, only 34% of 2007-08 Bachelor’s degree recipients graduated with no education debt. This means that 2 out of 3 people in college have some from of debt (and you’re in the minority if you don’t have any debt at all). As the cost of education increases, so too will both the number of people that need help paying for college and the amount they’ll need to borrow. To put it in perspective, the average student loan debt after graduating from college increased from about $21,000 in 2004 to almost $28,000 just four years later in 2008.

Fortunately (and unfortunately), student loans differ some from other kinds of loans. On the one hand, they are usually easier to obtain. The government, via Sallie Mae, makes it relatively easy to obtain loans for higher education (Sallie currently manages over $180 billion in loans). In fact, the company exists to extend loans to people who want to go to school – it’s a way for the government to invest in the country’s future. On the other hand, government loans are more onerous. For example, if you don’t repay your student loans, that fact will stay on your credit history forever – making it much harder to obtain a loan in the future. But an individual who has a lot of debt from other types of loans and can’t pay it off can declare bankruptcy, which will disappear from their credit report after about seven years. It seems kind of unfair that people who borrow money for less noble causes than higher education get a “do over” but college grads do not (maybe they’re supposed know better than to default on their loans).

The combination of more student debt and tougher rules takes on additional meaning in today’s job market. While college grads under 25 enjoy a lower rate of unemployment than young adults without a college degree (8% versus 24.5% in April of 2010), they aren’t unaffected. For example, according to the Bureau of Labor Statistics, that 8% figure is really high compared to the rate of 6.8% a year ago and just 3.7% in April of 2007. If debt is going up while the number of available jobs (and the salaries for those jobs) is decreasing, it doesn’t bode well for future credit ratings of this generation.

Start watching the paper for stories on student loans – particularly private universities that have been benefiting from the easy access their students have to credit. Some investors are already asking if easy access to college loans compares to the easy access for mortgages that damaged the entire U.S. economy in 2009. A major difference is that if you default on a mortgage, the bank can take back your house – but they can’t really take back your education. If banks can’t make money on student loans, it could lead to fewer funds being available, more people attending public universities, and the opportunity for creative thinking to fund a college education (People Capital, for instance).

So what does this mean for the TILE Community? Well, if you’re not personally affected by the student loan crunch, you can bet your friends will be. They may not be able to keep up with the lifestyle you’ve shared in the past, and that will certainly alter the range of activities available to all of you. (This isn’t a bad thing, by the way – the best things in life truly are free.) But as a member of this generation, it’s important for you to stay ahead of big economic developments like this one, so you can safeguard your assets against another big, bad credit bubble.