[YTmWSOA5]

I think that as soon as you stated "inflation" you went off track.

Inflation or deflation are relative to the market and the supply of products for which there will be a demand.

You sign a contract (promissory note) to pay back any "borrowed" (licensed) FRNs with interest. This is not inflationary in itself. The note you signed becomes an "asset" held by the bank. As long as you keep that asset healthy by making the payments, the bank is not at risk. And, as long as the economy is growing with more supply and more demand increasing, there is a need to increase money supply to match that market.

Now, when you pay off the note, you extinguish the money supply borrowed (principal) leaving only the interest as the new and immortal money. The growth of interest amounts make up the longterm and permanent growth of the money supply. All else is temporary.

To aggravate this, if suddenly the market begins to falter and the notes are not serviced- delayed or missed payments, the note becomes unhealthy and the growth of that immortal portion is now attacked. The immortal interest is then being killed. If the note is defaulted, all its future interest growth is killed and the lost principal counteracts the growth of the old interest amounts in the money system. This is a deflationary cycle, but is not really deflation unless we have a surplus of goods and buyers with decreasing money available. We always need to compare the market with the money supply, including, very importantly its velocity, to see whether we have inflation or deflation.

One more monkey wrench. The money masters manipulate the numbers, dispersement of funds and exchanges among world banks as well as with private corporations. They answer to noone so it is impossible to track what they do.

Regardless of the technical terms, I don't agree with this. Again, if the bank is not loaning money that is on deposit, they are not practically/effectively risking one penny. Their methods of accounting may suggest that they are taking a risk, but how can you risk something that you never had in the first place? I say, you can't. Their only risk is that they won't earn money that they weren't entitled to in the first place. Furthermore, if the money loaned is placed into the system, that is new money that didn't exist previously. New money= new supply. Increased supply effects the scarcity of money and thus translates into higher prices (and yes, I know this is not the technical definition of inflation) as long as all other factors are equal.

dys