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

To: Jack of All Trades who wrote (67957)	8/10/2006 1:37:44 PM
From: Mike Johnston	Respond to of 110194

"But at what pt does demand fall when the ones hoarding stop hoarding and work off their supply?" That depends on policy. If the government decides to bring down inflation, rates rise to a sufficient level to make holding money attractive, then dishoarding begins, demand drops, prices come down. The end user stops hoarding causing demand to drop and working off the supply probably means that demand collapses close to 0 for a while, that causes a recession. If the inflationary policy is continued however then hoarding will increase since the ammount of $ in circulation increases as well. In extreme case of hyperinflation hoarding would be 100% and economic activity would collapse, since there would be no exchange of goods except barter.