cedit crunch over: the keynsians were right, page-34

bonzaboy, what your missing is that the net effect of these credit crunches is to destroy debt. That's not immediately apparent because everyone is focused on the growing public sector debt. It's true that some debt is transferred from the private sector to the public sector, where is is eventually dissipated over time by repayment, inflation and GDP growth. But at the end of the day, there will be less debt, especially bad debt. Trillions of bad debts and funny money has been written off already.

As to the inflation-deflation debate, some things like housing has deflated in other countries and that will probably happen here. And we will probably get some inflation eventually when things pick up, but so what? It's not like the 19th century, when significant numbers of people lived on 2% fixed interest deposits.