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Politics : Mainstream Politics and Economics
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To: grusum who wrote (6866)1/13/2012 11:13:28 PM
From: Little Joe  Read Replies (1) of 85487
 
"so you think the number of dollars, determines a dollar's value? if that's true, how can there ever be price deflation? there's never fewer dollars. and if there's never fewer dollars, how can prices go down? we've obviously had deflation a few times since fractional banking came into existence. how did that happen?"

By my definition inflation is in fact an increase in money supply. I presume but do not know that your definition is rising prices. While our definitions may be different the correllation is generally the same.

We had deflation in 1929 which resulted from the liquidation of debt and the resultant reduction in money supply. I never said that there were never fewer dollars, what I said was eventually the burden of debt becomes too great to allow us to carry debt and then the debt starts to liquidate, which results in a reduction of the money supply, which creates economic problems

This is precisely what we are experiencing now. That is why all of the feds heroic efforts to get the economy moving are not working. We can continue to print money but most people are over leveraged and so is the government. What this means is that the consumer cannot take on more debt and the government is taking on debt that will never be paid, under the existing system.

This will end in disaster.

lj
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