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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Tommaso who wrote (72723)12/24/2007 12:56:54 PM
From: mishedlo  Read Replies (2) of 116555
 
This is inflation. Deflation in these conditions is impossible.

For starters base money is barely expanding, but yes, it is still expanding. And as long as credit expands with it, deflation is not happening by definition. This is a definition. Pure and simple.

If by "these conditions" you mean deflation cannot occur if money and credit keeps expanding then I agree BY DEFINITION. The word impossible does not even fit into the discussion. Furthermore "Red is red by definition" and to say "deflation is impossible in these conditions" has about as much meaning as would the statement "it is impossible for red to be blue in these conditions".

However if by "these conditions" you merely mean the expansion of money as opposed to expansion of money and credit, then Japan has already proven you wrong. What you say is impossible, has already happened.

Mish
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