Share
Hey Skip.
Thinking this through, I originally thought it sounded like codswhallop...
However after reading your follow up post, it makes a kind of potential sense...
1. Huge decline in asset values
2. Derivatives also fall by the wayside
3. While amount of cash goes up, actual asset basis of society has been going sharply down (trillions marked off securities, building and company values - and over 50 trillion dollars worth of derivatives may be worthless)
So the amount of cash goes up but the person on the street sees their real value go sharply down.
Stress causes them to be happy with lower wages which in turn causes macro economic pressure on global commodity prices (such as oil). They will also be forced to sell their assets and chattel at greatly reduced (and continuing to decline) prices (hence deflation).
I think this is the sort of thing you're getting at.
I think China will help out the Australian economy though whilst the US may burn - there will still be demand for commodities.
China has just announced putting $200B dollars into the earthquake ravaged.
And it is the large infrastructure projects (such as the Hoover dam) that help through the US economy through the depression through continuing to add new money to the economy - essentially printing their way out of deflation.
