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Why do you think it's inevitable that there will be a deflation? Genuine question, it seems the money supply is going to be increasing?
by phreeza 7y ago
Why do you think it's inevitable that there will be a deflation? Genuine question, it seems the money supply is going to be increasing?
- Der_Einzige 7y agoNope. The dollar is so strong that other countries are trying really hard to get as much USD as possible. This means that liquidity is drying up and there is a shortage of dollars world-wide. This is deflationary right until we see the banking sector collapse.
- sfj 7y agoThat's one factor, I'd argue it is caused by the $12 trillon is usd denominated debt, and due to the economic situation, no cashflow to pay it. But the Fed has been ramping up printing presses, creating a tug of war. How long before the latter overtakes the former? The Fed just expanded repo to $1 trillion per day: https://m.theepochtimes.com/fed-expands-repo-to-1-trillion-per-day-to-avert-liquidity-crunch_3280317.html https://m.theepochtimes.com/fed-expands-repo-to-1-trillion-p...
- Der_Einzige 7y agoYou're totally right about repo and massive amounts of loans, but the impact of other countries trying to get USD outweighs this - at least in the short term. Checkout currency trading right now - the USD is surging compared to every other world currency. That's because demand for USD is extremely high world wide.
- buildawesome 7y agoInvestopedia has a good definition of deflation after crises that might be helpful to you. https://www.investopedia.com/articles/personal-finance/030915/why-deflation-bad-economy.asp https://www.investopedia.com/articles/personal-finance/03091...
- ric2b 7y agoI don't think it can happen for any period longer than 1 year, when the entity that can create unlimited money at will has 2% inflation rate as one of their two main goals.