Re: causes of the depression

On May 3, 10:17=A0pm, orangata...@[EMAIL PROTECTED]
 wrote:

> > What causes deflation? And, how do you know that?

> Inflation is caused by increasing the amount of money in circulation.
> Roughly speaking, if the amount of money in circulation doubles the
> value of money halfs. So, if the fed creates a lot of new money
> inflation increases.

> Deflation is a contraction of the amount of money. If the amount of
> money in circulation decreases the value of each unit of currency
> increases.

> Credit created by banks is interchangable with money. When a bank
> gives you a credit card with a 10000 dollar limit it does not need to
> have the 10000 dollars in its vaults. It only needs to have 10% of the
> amount it lends as reserves, as i pointed out earlier. =A0so the bank
> can create 9000 of those dollars out of thin air.

Sure, the bank doesn't need to have cash, but doesn't it need to have
assets to back the debt that it issues?

> thus =A0a credit card increases the amount of money in circulation,
> causing inflation. If the credit card is taken away the amount of
> money in circulation decreases, causing deflation.

Who has done a study to show that your statements are correct?

--
    Ron