BiggerPockets

I was reading the comments that followed (always more interesting than the article itself) and I can't believe how many people still don't understand our monetary system. THE USA DOES NOT CREATE MONEY WITH A PRINTING PRESS!

Money is created, and destroyed, in the Federal Reserve. Currency and coins are only created to meet the demand for people that want to hold cold hard cash. Basically, if everybody in the world deposited all their US cash in the bank and the Fed incinerated every single bill and coin, our money supply would NOT change one bit.

Of course, they would have to get the presses rolling again as soon as people started hitting the ATM's. :-)

I was reading the comments that followed (always more interesting than the article itself) and I can't believe how many people still don't understand our monetary system. THE USA DOES NOT CREATE MONEY WITH A PRINTING PRESS!

Glen Beck's show yesterday was on the topic of DEFLATION followed by a HYPERINFLATION comparing the situation to Germany in the early 20th cent.

Check out the very objective comments from the "media matters" crowd at the bottom of the page. So typical. Felt like I was on campus again! Dude.

http://mediamatters.org/mmtv/201008020058

Anyway, as for the current situation. We've had the debt collapse, and deflationary reaction. Time will tell if the Gov decides to inflate the debt away and we get HYPERINFLATION. Get your wheelbarrows out

Originally posted by Tom Cullen

http://mediamatters.org/mmtv/201008020058

Ugh. It's like listening to an 8 year old try to teach calculus. He clearly doesn't understand the meaning of the words he using which can only lead me to believe he doesn't understand the bigger picture either. Either that, or he does understand but feels the need to embellish for some reason.

For example, his use of the term "deflation." He clearly believes that slowing economic growth is the equivalent of deflation. But, that's not true. Just because inflation is slowing does not mean we have deflation. Deflation is a negative growth, not a slowdown in growth.

I just don't understand why -- if he believes his point is valid -- he needs to lie and make things up. (either that, or he really doesn't understand it)

And another example: His point about deflation being indicated by a drop in home prices. That's a lie. Just because home prices collapsed doesn't mean we have negative economic growth. The two may (or may not be) correlated (I haven't done the research), but they are certainly not the same thing.

Sorry...I tried to give him a chance with an open mind, but I just can't get past the half-truths...

Btw, I'm not saying he's wrong and I'm not arguing that what he says won't happen. I certainly don't know enough to know if he's wrong or not. Maybe he's right. But, he's still using half-truths (at best) to make his point, which makes it impossible for me to get through the whole thing.

One reason I like real estate. Inflation, deflation, I still have a house and that house is something useful.

Stocks, and even money, can turn into toilet paper under adverse conditions.

Of course, the way the current administration so going, they might decide that I can't get tenants out, no matter what, or even decide to give my house to my tenants. Then, I don't even have toilet paper.

Btw, I'm not saying he's wrong and I'm not arguing that what he says won't happen. I certainly don't know enough to know if he's wrong or not. Maybe he's right. But, he's still using half-truths (at best) to make his point, which makes it impossible for me to get through the whole thing

Yep yep yep, uh-huh, uh-huh.

Well, we certainly wouldn't want you to go out on a limbaugh or anything.

Feel free to hedge. :roll:

Tom -

Are you married?

Is this a dating site now?

Just kidding LOL

I think that both sides of the media and govt and everyone else with an agenda is using half truths or creatively edited info to promote what they think is the right direction to head this freight train. That's what happens when people are so divided on the issues.
I don't feel I can trust much of the info I read because it seems like people are on one side or the other . I read and watch both sides-so to speak- but still don't feel I've been given all the info .
Anyway I feel like I'm rambling
Happy Sunday
Chris

Originally posted by Tom Cullen

???

Sorry, will use smaller words in the future.

Anyway, never mind, figured out what I was looking for...

J Scott, I wanted to correct a typo in your earlier post. Deflation is not negative growth in the economy but negative change in prices. In other words, it is inflation that is negative.

Also, hyperinflation is not the same as high inflation. I think people use the term hyperinflation very loosely to refer to high inflation but in reality hyperinflation is a state where there is no equilibrium in inflation and it spirals out of control.

It is possible that the U.S. could go through a period of high inflation in the future as that would make it easier to pay off debtors by, essentially, reducing the real value of their asset. But the experience of Japan, which had a bubble that burst followed by cheap money and government stimulus, shows that we could be in for a protracted period of low inflation in spite of long-term fiscal and monetary stimuli.

Originally posted by Vikram C.

It is possible that the U.S. could go through a period of high inflation in the future as that would make it easier to pay off debtors by, essentially, reducing the real value of their asset. But the experience of Japan, which had a bubble that burst followed by cheap money and government stimulus, shows that we could be in for a protracted period of low inflation in spite of long-term fiscal and monetary stimuli.

Just playing devil's advocate here;

Is it possible that our government would willfully induce a period of hyperinflation in order to pay off our creditors(China) faster?

As Vikram pointed out, deflation is the lowering or decrease in prices. The CPI is not the best measure of real inflation but is still one of the best measures we have.

Regardless of the CPI results, I would argue we are actually in a deflationary type of period right now with decreases in home prices as well as other consumer goods (so companies can get you to buy things). With all of the money pumped into the system we will undoubtedly see a period of high inflation in the future. The question is, when will this happen, and might we see a "stagflation" scenario during this period of higher inflation - That is my concern.