Comment by foundZero

Entered on: 1/12/2009 3:09:57 PM

Huh. Very well formed thesis. By far the simplest explanation of how we can have an increase in money supply but deflationary indicators at the same time. The common person doesn't feel the effects of deflation until the money is spent into circulation. So oddly it does fit that the banks are preventing inflation.

Now what do we suppose they will do with all that money? They aren't going to eat the stuff. But if I were them, if I was getting more free money every day but prices were still falling, I'd just keep saving money.

Seems like an external triggering event is required and I still propose the eventual reduction of supply as that event. Barring anything even more catastrophic.

Either way, are they ever going to have one hell of a shopping spree.