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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (49953)	1/17/2006 11:53:35 AM
From: kris b	Read Replies (2) \| Respond to of 110194

"The outcome in Japan, where the Japanese government spent a fortune trying to pump up the economy, would have been inflationary had it not been for the current account surplus and savings rate of the Japanese" You are missing one point. Government can spend as much as they want, but as long as the wage earner keeps that money in his/her savings account rather then spend it you have deflation. Creating money is meaningless if it can't find its way into the economy. Once again, collapsing velocity causes deflation. It will not be inflationary if nobody spends. It will just sit in a saving account without putting pressure on prices. The exchange rate of the currency is not just economical but also psychological event. In depression, when everybody is scared shitless, people turn to the currency that is perceived the safest.