posted on Oct, 8 2008 @ 10:10 PM
reply to post by Grumble
In Deflation, only those who hold actual dollars, or have deposits in very secure investments will have money. A huge number of investments will die,
and the money put into those investments will disappear. Of course, the super rich will still have money, but not nearly as much as they had before
the collapse. They simply won't be able to pull their money out of the system fast enough, because their very effort to sell large amounts of stock
will wipe out the value.
If the governments create massive inflation, than everyone loses. The whole system collapses if the money is hyperinflated. That would be even
worse, and I suspect that the government will pull back trying to rescue the markets before that happens. In order for the system to work at all,
wages and salaries must keep up in order for goods and services to move, at least that was the way things were done in Germany. In this
hyper-inflation, debt holders lose the most. If wages and salaries do not increase with prices, then absolutely nothing sells because nobody can
afford to buy anthing, and once again, deflation must set in.
How long do you think the markets could last if almost the entire population stopped buying stuff? With the fractional reserve system, if all that
money stopped circulating for over a week, then the monetary system would dry up. How many people are stocked up to last a week. I am.