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

To: Skeeter Bug who wrote (104716)	8/29/2009 4:34:55 AM
From: Elroy Jetson	13 Recommendations Read Replies (2) \| Respond to of 110194

You got it basically right. Hyperinflation favors the highly indebted against the wealthy, and America is controlled by wealthy people by design. Higher inflation is also accompanied by higher interest rates which would further reduce the value of loan collateral such as real estate, which is why no nation has ever solved their debt problem through hyperinflation. But excess debt can be and is easily solved through bankruptcies and foreclosures which is very deflationary as money is instantly evaporated. In reality the loss to the economy occurred earlier when perfectly good money was malinvested in loans on excess buildings and other credit bubble items. Accordingly the published decline in the money supply lags the actual loss because the money/loan is still on the books until banks can accept the reality and write down the loan. Some have described an economic depression as the sudden realization of prior losses. The Fed and U.S. Treasury are lending and spending new money into the system at a slightly slower rate than it is being destroyed, like a bubble with a slow leak. I'd prefer a faster leak rate, but the concept is sound. The economy remains functional during the debt liquidation period. The loans to the banks are in large part replacing a portion of assets which no longer actually exist. The fact that the "new money" aka new loans is being counted as an addition without subtracting the real extent of the losses makes money supply growth look far larger than it is. .