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Liquidity crunch vs. liquidity trap & hyperdeflation

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Pyramid posted on Thu, Dec 18 2008 12:39 PM

What is the difference between a liquidity crunch and a liquidity trap?  It is my understanding that what is currently happening in the market is a liquidity trap which is why Bernanke is injecting money directly into the banks and throwing out more helicopter money.  Is a liquidity crunch and trap the same thing?

Hyperdeflation vs hyperinflation.  I am very concerned with FED running the printing presses at full speed.  Recently, there was a 138% increase of the money supply in just 12 weeks.  If this continues we will be in the same boat as the Weimar Republic.  Right now, I understand the market as being affected by hyperinflation, not hyperdeflation.  I'm hearing arguments that 4-5 trillion was destroyed in the money supply (how this is figured I don't know because M3 reports are no longer being released) and this is causing a liquidity crunch.  Is this accurate, what is really occuring in the markets?

 

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Can no one here answer my questions?

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I think that most economists agree that hyperinflation is better then hyperdeflation, although that is like the difference between burning alive and freezing alive. You will prefer to burn, but you die in both cases.

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So what are we experiencing hyperinflation or hyperdeflation?

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ecoli replied on Thu, Dec 18 2008 4:06 PM

right now, neither, but the Fed is trying to create inflation (though not hyperinflation).

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