I thing I defined and gave an example of what is happenning in Japan. Read a current issue of Economist about a big problems in Germany.
Federal reserve "creates money" by selling and buying bonds in the open market.They also dictate how much reserve banks have to hold (cash on hand) : currently 5%, the rest they can loan out. Banks are not obligated to make loans if they preceive the economic evironment as unpridictable.
Both deflation and inflation are partly a preception of what the future may hold. Currently, the world has too much capacity (i.e.,mfg) in just about anything you can think including cars. Just visit Walmart or Home-depot and see how much capacity China has.
BTW. After WWII, western countries set up a gold standard (in Brenton Woods, Vermont: very nice area). Nixon took the U.S. dollar of the gold standard in 1971?.
If it was easy to fight deflation Japanese would have done it anytime since 1987.
Also, Federal reserve is pretty much loosing control of the money supply anyway. They are so many finacial instrument e.g. reverse mortgage etc. that feds have hard time controlling. Ithica NY has a system set up, basicly a barder system for local goods/service, that keeps the money in the local economy.

posted by 32.101.4...

• OT: Economics ... Deflation worries, J, Sat, 14 Dec 2002 11:43:15
  • The supply of 'new' money does not necessarily..., Jon in Chicago, Tue, 17 Dec 2002 13:34:53
    • Oh, maybe better explained..., Jon in chicago, Tue, 17 Dec 2002 14:44:15
      • 1) I agree with what you're saying ..., J, Tue, 17 Dec 2002 15:19:52
        • Re: 1) I agree with what you're saying ..., Jon in Chicago, Tue, 17 Dec 2002 16:28:21
    • I don't understand reason for sarcasm, but ..., J, Tue, 17 Dec 2002 14:31:59
  • Some Misunderstandings....., Alex C, Sat, 14 Dec 2002 23:43:42
    • Nixon took dollar off of gold standard years ago., J, Sun, 15 Dec 2002 00:56:28
    • Re:J, you original q was about deflation?, Jon906, Sun, 15 Dec 2002 00:32:02 <-- Viewing This Message
      • Alright ... there isn't a simple answer, but I did ..., J, Sun, 15 Dec 2002 01:33:20
      • Do you live in Ithaca, NY? Lovely part of country ..., J, Sun, 15 Dec 2002 01:05:48
      • thanks. it makes more sense now. n/m, J, Sun, 15 Dec 2002 00:52:16
  • Deflation worries>> VERY long, K-9, Sat, 14 Dec 2002 18:54:26
    • The word you are all looking for...and more... (LONG), Jeff Malin, Mon, 16 Dec 2002 22:19:16
      • Thank you... and... I hope "fiat" money is better than, K-9, Tue, 17 Dec 2002 14:42:52
      • You get a B-. Your answer was good, but it answered, J, Mon, 16 Dec 2002 23:23:19
        • What to do next, Jeff Malin, Wed, 18 Dec 2002 15:47:28
    • O.K ..., J, Sat, 14 Dec 2002 21:13:56
      • Improving Economics Education, economic barometer, Wed, 2 May 2012 12:54:31
      • Re: O.K ..., K-9, Mon, 16 Dec 2002 13:56:04
  • Re: OT: Economics ... Deflation worries, Ed MA, Sat, 14 Dec 2002 15:32:56
  • Re: OT: Economics ... Deflation worries, bRAD, Sat, 14 Dec 2002 12:25:59
    • Re: Deflation_big problem., Jon906, Sat, 14 Dec 2002 13:27:11
      • So, why not print money?, J, Sat, 14 Dec 2002 14:14:54
        • OT: Economic theory worries.............., zeke, Sat, 14 Dec 2002 19:09:19
          • Deflation is created by too much of a good thing?, J, Sat, 14 Dec 2002 21:37:22
          • Zeke, question for you>, K-9, Sat, 14 Dec 2002 19:36:43
            • Higher Ed' opportunities in MA....., zeke, Sun, 15 Dec 2002 07:38:33
              • Zeke, thanks for the info, K-9, Mon, 16 Dec 2002 14:02:11
        • Re: So, why not print money?, Ian Glenday , Sat, 14 Dec 2002 16:51:20
          • Ian Ian Ian ... you should answer the casting call for, J, Sat, 14 Dec 2002 21:28:09
  • It's certainly hurt the used vehicle market..., b.flippo, Sat, 14 Dec 2002 12:23:49

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