You suggest that because the new money would lose value as fast or even faster than it is created, they will not try it. During the Great Recession of 2007-08, the United States began to experience deflation, when the inflation rate fell below 0%, marking a measurable decline in the cost of goods and services. If that requires the “Twelve in a room in America” of W S Story, so much the better! The US's deflationary debt unwind will cause the dollar to collapse driving up the cost of imports (oil) and inflation, as has happened in Iceland. The accumulating bad debts ripple through the economy up to the financial sector, which must then write them off as losses. It also has the option via the government of Universal Basic Income(UBI). This chart goes back to the 1980s for scale and perspective. A deflationary spiral typically occurs during periods of economic crisis, such as a recession or depression, as economic output slows and demand for investment and consumption dries up. The FED has blown its bug guns and the markets ignored it. If you bring an argument into this forum, David, 18 poorly supported words isn’t going to carry the day. ... which led to the collapse of … Much bigger disasters loom, by the way, since the Social Security and Medicare/Medicaid systems also face certain bankruptcy. Everybody seems to have some theory about why hyperinflation is likely, but I haven’t heard a good one yet. In my opinion America is toast on so many levels, that what is going to happen to her can best be described by a term from Physics: I don’t see even a slight possibility that deflation can be averted — or ‘not allowed’, as you’ve put it. Yuan ,Rubles,Yen, Rupees, Sterling? Such a catastrophe would be to the detriment of Mr. Greenspan's real employer, and place severe … Hi RA, Negative interest rates occur when borrowers are credited interest, rather than paying interest to lenders. If the Fed types stay in power, NIRP/ZIRP makes it affordable a la the Japanese CB policy. Fear of Deflation Lurks as Global Demand Drops By Peter S. Goodman Read entire article here. It nearly crashed in 2008 and has yet to truly recover from that near catastrophe. Deflation is the decline in prices for goods and services that happens when the inflation rate dips below 0%. ... Debt during the same period, nearly 20 years, grew at a compound annual rate of 7.9401%. Your observation that deflation is inevitable misses one very important fact, this time the Fed has digital money which can be credited instantly to the accounts of every citizen in unlimited amounts(i.e “helicopter money”), the Weimar government had the inconvenience and the obstacle of physically printing vast quantities of paper notes and distributing them. As if you are dealing with intelligent, rational, responsible people! Nevertheless, the Fed’s intentions are to slowly hike rates. Euro currency could collapse under pressure of the sovereign debt crisis, IMF warns Most watched News videos Shocking moment man on a flight to Turkey punches at a woman The ramifications of the collapse in social mood that caused deflation were felt throughout the 1930s as societies fractured. The problem is much, much, much bigger than whatever political hubris can be inveighed against it. slow default equals inflation not deflation.I think the dollar will go through hyper inflation before its collapse. Oh really? I can’t do anything like I used to, isn’t that the real definition of deflation? Following the stock market crash of 1929, American economist Irving Fisher published his book The Debt-Deflation Theory of Great Depressions, in which he devised a theory on why economic recessions occur and how a country’s debt burden can affect price levels. You can see two debt mountain peaks. During the Great Depression, money appeared to ‘disappear’ because in capitalist economies, banknotes are derivatives of credit and debt masquerading as money; and in a severe deflationary collapse, debts default, credit is withdrawn and what appears to be money vanishes. Tags: America, Deflationary Collapse, Economy, financial sector, James Howard Kunstler, Matthew Simmons, Mel Gibson, Oil Spill. That's because when a dollar loses nearly all its value, then $100 or $1,000 or $100,000 isn't worth much either. Anyone who doubts this should be required to answer this question:  Do you actually believe that millennials and gen-xers who are living with their parents till they’re 35, and who are $50,000 or more in hock for mostly worthless college degrees, will be able to foot the bills for baby boomers’ Social Security and Medicare? Trump will prove to have been just a speed bump on the way to Dr Zhivago. Amazing. 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