So let's start:
1) Debt liquidation leads to distress selling
Huh? So paying off your debt creates distress! Bizarre premise!
2) Contraction of deposit currency, as bank loans are paid off, and to a slowing down of velocity of circulation. This contraction of deposits and of their velocity, precipitated by distress selling, causes
Explain how paying off a bank loan reduces deposits.
3) A fall in the level of prices, in other words, a swelling of the dollar.
A decrease in prices over the whole economy means that the dollar increases in value.
This is a good thing - that which the market values the most (money) improves its value over time, which must logically mean that the people improve their prosperity and wealth as well - since what they value the most (and will gravitate to holding it) increases in value.
You do not seek to buy stocks or investments that degrade in value over time. Why then do you believe that your investment in money should perform differently?
8) Hoarding and slowing down still more the velocity of circulation.
The assumption here is the human being do not need to spend to live.
You try that for a couple of months and see if that is true!
As I said before, Fisher is a crackpot - he invented the Rolodex, made millions and lost it all (and his families too) in the 29 crash, after famously saying "that the stock market had reached "a permanently high plateau."
Whereas the phenomena of hyperinflation is directly due to the death of money, again, hyperdeflation simply cannot exist since one does not need currency to enact a trade.Both hyperinflation and hyperdeflation are strictly monetary phenomena, having little to do with a scarcity or abundance of goods. Shortages of goods under hyperinflation are not because of a scarcity of goods, but rather a glut - virtually no scarcity - of the currency. A shortage of money under hyperdeflation also has nothing to do with the supply of goods, but rather an absolutely scarcity of currency with which to buy them.
Exactly.If there is no currency available to you, it really does not matter what the price is in that currency. You can try to price what you want or need in other things, but with no competing currencies, you're talking barter.
And in no time, a competing currency will appear - one need only to look into a prison - where FRN are essentially restricted to zero - the competing currency that rises is another commodity that is very heavily desired other than pretty paper with dead white men on them...cigarettes.
In any economy where currency is voided - another currency quickly and immediately appears.
No.The bigger economic law - the fundamental that most don't take into account, is that a debt-money based economy - an economy where money can only be created as a form of debt - is only viable in a productive, growing economy, with at least moderate inflation required to sustain it.
Another form of money rises to replace it.
But this has nothing to do with "inflation" "deflation" or interest rates that are at near-zero.Again, priced in what, and is it available at any price? Who could get a loan ten years ago? Now, out of those people, how many can get one today?
Loans are not being made because the banks fear the marketplace and the ability to repay. So, instead, they have piled up their cash into the Federal Reserve paying 0.25% interest....
There is no accepted definition for hyperdeflation, so I think of it loosely as prices falling, rapidly and substantially over a very short period of time (call it a "crash), and primarily as a result of a contraction of the money supply - which in our debt-money regime means contraction of credit, because that is the only way money is created.
Follow the money.
I have a debt to you of $100.
Someone pays me for a service, and my fee is $100.
That someone removes $100 from his bank acct, and pays me.
I take that $100 to pay you, and close the debt.
What do you do with the $100?
You deposit into your bank account.
The money supply has not changed at all - paying off a debt does not reduce the money supply as the money never leaves the banking system.
In a fractional reserve system, this fundamental does not change. A debt repaid is merely money from one bank account going into another bank account - the money supply in the banking system does not change.
Only by bank failure does the massive de-leveraging of reduction of the money supply create such a change in the money supply - ie: 1929
Deflation can only occur when the banking system itself contracts - as it did in 1929. Bank failures consumed deposits, which shrank the money supply, creating deflation.
This is impossible today as the FIDC guarantees such deposits, thereby re-monetizing the deposits, and maintaining the money supply