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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Wyätt Gwyön who wrote (34565)6/28/2005 2:54:13 PM
From: Mike JohnstonRead Replies (2) of 306849
 
Under current system, deflation is not possible, since the Fed has the capacity to create unlimited amounts of new money.

And indeed that what has been happening on a big scale since 1995. And not only the Fed can print money, they have no limits on injecting that money wherever they wish, either through creation of credit or even destruction of credit ( technically destruction of credit is deflationary if it is liquidated through paying it back or defaulting, however Fed can actually increase money supply through destruction of credit if for example they buy and then liquidate either government or private obligations in bailouts)

Gains in productivity which lead to increased production efficiencies and lower prices should not be confused with deflation.

In my opinion, deflation will happen only after the Fed is no longer able to print money at will, and that can only happen when the dollar collapses at some point in the future.
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