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To: Hawkmoon who wrote (98900)	6/24/2009 2:29:37 PM
From: Claude Cormier	Respond to of 116555

When the loan is initially created, the money is spend by the creditor and goes into the system. If he repudiates the loan for whatever reason, the loan is written off from the banks book, but the money remains in the system. All that happens is to restrict the bank lending ability. In itself this is not deflationary. If the borrower reimburse the loans then the credit destruction is equivalent to monetary deflation as the money initially loaned is removed from the system. The bank ability to loan is maintained, but this in itself is not inflationary.