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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: LLCF who wrote (239430)2/25/2010 4:33:27 PM
From: Skeeter BugRead Replies (1) of 306849
 
LLCF, but the net effect on the economy under the scenario is actually deflationary. the $50 trillion i buried has no effect at all (beyond psychological, which can be significant in the speculating arena, but i'm talking real economy here), but the $2 trillion i suck out of the economy through increase taxes does have an effect - an effect of making me more poor and willing to pay less for goods and services.

that is deflationary in the practical sense. in this hypothetical, it is SEVERELY deflationary as long as that $50 trillion stays buried.

now, if i want to buy up CA on the cheap, would i keep the money buried or spend it all over CA?

i understand why you believe this to be inflationary - and it is in the academic way. but if the prices i pay for everything is falling as demand collapses, what is the point of calling the scenario "inflation?"
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