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To: arthurus

Deflation and inflation are monetary phenomena. Deflation is a collapse in the money supply. Inflation is a huge increase in the money supply.

The last major deflation the United States experienced was 1930-33. The US money supply declined by a full 30%. It wasn’t a good thing.

The Fed and other central bankers are currently trying to keep the series of collapsing asset bubbles from shrinking the money supply. It’s not much more complicated than that.

Mike Shedlock argues that the series of asset bubbles that the Fed is fighting was set into motion by bad Fed policy in the past. Which would have been Greenspan’s very low interest rate policy. Shedlock may well be right.


22 posted on 12/21/2014 10:10:42 PM PST by Pelham (Treason, not just for Democrats anymore)
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To: Pelham

The very mild inflation of the 90s was was beneficial. the deep deflation of the thirties was not kind to the lenders and financiers.


24 posted on 12/22/2014 6:42:02 AM PST by arthurus
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