Jesse’s Café Américain: Monetary Deflation – Not Visible Yet

Inflation is a monetary event. Prices increases are a symptom of inflation and reflect the weakening of a currency. Inflation is necessary in order for debt to perform. Debt is increasing and it guarantees more monetary inflation in the future. Physical gold cannot be inflated.

Save in physical gold. Spend and borrow in dollars.

Jesse’s Café Américain

“Satan says, ‘I am no one. Why be afraid of me?’…And having fallen far from the eternal, the Evil One’s desires are endless, insatiable. Having fallen from pure Being, he is driven by the desire to possess, to fill his emptiness. But the problem is insoluble and pernicious. He is compelled to have and to hold, to possess and consume, and nothing else. All that he takes, he destroys.” Denis de Rougemont

13 March 2012

Monetary Deflation – Not Visible Yet

As a reminder, in a purely fiat monetary system, inflation and deflation are the result of policy decisions, and not any endogenous factors in the economy. Extreme outcomes such as a protracted deflation or hyperinflation are almost always the result of some policy decision which may be in error, unless they are caused by some exogenous shock or force.

This is a fundamental fact of how a fiat money system works, and what makes it different from a system in which the money is tied to some external control or standard, or some other relatively inflexible metric from the perspective of the system.

Please see Money Supply: A Primer if you wish for an explanation of some of these money supply measures.

And for all the Austrian econommists, I have included True Money Supply as the second graph.

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truemoneysupply.png

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Jesse at 12:53 AM
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