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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (367588)	1/20/2008 11:47:38 PM
From: RetiredNow	Read Replies (1) \| Respond to of 1571405

Not true. If you currency is rising relative to other currencies, then that by definition is a deflationary pressure. Now normally, our Fed will increase the money supply almost as fast as our GDP growth rate to keep the currency in a relatively stable band. But since Bush's and his Republican Congress's policies of the last 7 years have destroyed the value of the dollar, inflation has become a real concern. Deflation, decreasing relative prices, can come from two major sources: 1) an increasing dollar value relative to other currencies, where demand and supply remain stable, will increase our purchasing power, which means goods and services are cheaper 2) decreasing demand from a faltering economy, can lead to oversupply and decreasing prices Number 1 is healthy. Number 2 is not healthy. So what happens when the dollar value is decreasing faster than demand is falling, as is the case in the US today? Inflation.