Stock Market Slides - Intervention Unsuccessful | Chris Martenson

Looking Ahead

Stock Market Slides - Intervention Unsuccessful | Chris Martenson: "the KaPoom theory'.
In brief, it calls for an inflationary blow-off to a credit cycle that then falls into a deflationary hole for a while only to resolve into a massive hyperinflationary epoch when (not if) the monetary authorities panic and begin attempting to repair all the bad credit with fresh money...."

Submitted by cmartenson on Wed, 09/10/2008 - 07:22.

Jeff - one of the greatest sources of confusion out there is what inflation and deflation mean. So let's put a definition in here:
1) Inflation = a rise in money stock in proportion to goods, services AND assets (that last one is conveniently ignored by our Fed which is the single greatest intellectual oversight/mistake that they make).

2) Deflation = a fall in money stock in proportion to goods, services AND assets.

Since we all now know that money = credit = debt, I can define deflation thusly:

2) Deflation = a fall in money stock, credit, or debt in proportion to goods, services AND assets.

Note that nowhere did I mention prices of anything. It is entirely possible to have both deflation AND rising prices for some items just as it is possible to have inflation AND declining prices for some things. For our banking system prices are largely irrelevant. The continued expansion of credit/debt is the most important thing and this is why deflation is the most feared outcome for the overseers of the money system..."