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A Crash Course in Deflation

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Interesting thoughts on credit and deflation via Professor Pinch's blog:

"Credit is deflationary.  You have to pay back more than you borrow.  That only makes sense if you can make more than what you’ll owe.  But if you can’t, it leads to a restructuring or austerity.  Take your pick.  Real Bureau of Engraving and Printing madness is all that’s left, where M1 would essentially swallow up MZM and M3 levels of money creation.  But the minute that occurs, the run on hard commodities will be on in full force.  Everyone will know the whole gig is up.

Which is why the central banks won’t do it."