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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Hawkmoon who wrote (87910)9/2/2007 1:15:40 PM
From: John VosillaRead Replies (1) of 306849
 
'Issue debt, you create money (the Fed issues reserve notes -eg: cash-.) Default on debt and someone has to cover the losses and it reduces the money supply'

So we can have easily a two trillion hit from the total cost each from just the Iraq war, cramdown of debt from real estate losses in RTC II or a stock market crash. Do these losses really go to permanent money heaven even if nominal GDP growth is still sufficient and the broad monetary aggregates continue to expand? It just seems like perpetual ground hog day where over a long enough period to smooth out peaks and valleys in any asset your dollar continues to be worth less and less in its purchasing power.
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