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1: Government spending and the FED and then the banks. The treasury could order a trillion in new notes now and buy up anything from used unwashed handkerchiefs to sky scrapers. These would become new reserves and the banks would draw interest on the next 9 trillion they create to rape and pillage some more with inflation taxes.
1. Hyperinflation is caused when the price level increases VERY rapidly. This is caused by massive levels of money in the market so the unit worth of the currency goes into a downward spiral causing even more panic and lower confidence in the currency. This happened to Germany after the roaring 20s and also recently in Zimbabwe.
2. Deflation is the decline in price level, just opposite of inflation. "Deflationary spiral" means a deflation cycle feeding off itself... because there is no demand for goods companies cut prices, this has the effect of people waiting for even lower prices and companies having to cut prices even more, resulting in a vicious circle. During this cycle the company has to lay off people, guess what... laid off people cause demand to decrease further, now that just adds to the cycle.
3. Prices will retrace to fundamentals. There are no factors that make the case that prices will go up but there are a multitude of factors that say prices will go down.
House prices will deflate relative to the value of gold (real money).
Deflation and inflation are relative to the product/service and its demand.
Is the product/service demand global? (oil, food, apparel, IT services). Prices will likely go up. Is the product/service local? (US real estate, massage, barber) Price will go down, maybe by a lot.
No, and which experts talk about both? Deflation is a decrease in the supply of money/credit where as inflation is the opposite. You can't have both.
Events have gotten extremely deflationary, I don't know why people are still talking about hyper-inflation. I've noticed that the line seems to be changing to "deflation now....hyper-inflation long term". I suppose this is to make people feel matter about all the bets they made against their inflation predictions. You know, how the media tells you its okay if your 401(k) goes down 50% because you are "in for the long haul".
Quote:
Originally Posted by ViewFromThePeak
House prices will deflate relative to the value of gold (real money).
There is no "real money", everything used historically as money has no little to no instrinsic value. You may as well price houses in relation to sea shells.
I just read somewhere that we'll have both. Housing prices will go down and other things will spiral upwards.
But then when adjusted for inflation, houses will be even cheaper than they appear!
House prices going down is not a "debt deflation spiral". During periods of inflation or deflation prices do not move all in the same direction. Even during the depression some prices went up despite rapid deflation.
Price movements are effects of inflation/deflation they aren't the cause. The increase(decrease) in the supply of money/credit causes inflation (deflation).
Debt deflation is when the assets supporting the debt lose value. House prices will continue to drop, forcing more people to foreclose.
Prices of food and commodities will skyrocket.
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