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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: Oblomov who wrote (7756)8/15/1999 9:15:00 PM
From: JF Quinnelly  Read Replies (1) of 15132
 
Most M1 is held as checking deposits, and as such will be multiplied many times over through the fractional reserve process. Assets held in Treasuries won't do that.

And there's no way to predict how much of the new M1 would be converted to savings. All that new hot money looking for a home would certainly inflate securities, real estate, commodities, and most everything else.

There was a deflation when the debt was paid off in the 19th century, but since we now use fiat currency I don't know if we'd see a repeat.
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