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  • Hyperinflation, Here We Come
    Inflation is sometimes caused by the printing of fiat money, however, the inflation that we have experienced is an inflation of "checkbook money," the money that gets multiplied by the fractional reserve system.

    You put $100 in your bank, your bank loans out $90 of your money, that $90 winds up in another bank, that bank loans $81, that money gets into another bank, and then $70 of that money is loaned, etc.

    This is the modern cause of inflation. Because of this, some argue that we are in a deflation, in that banks are more reluctant to loan and the public reluctant to borrow. This winding down of credit extinguishes the fractional reserve's money creation abilities. There may be more paper money but less total money.
    Jun 18 06:33 am |Rating: 0 0 |Link to Comment |View article

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