I think you are missing my point. Let me try again. There are many forces (supply and demand) that can cause a currency to increase or decrease in value. We have set in motion a HUGE, PERMANENT force to lower the value of the dollar by printing tons of them. What are the odds that some other HUGE, PERMANENT force is going to arise to offset the downward force of the money printing?
Firstly, the term in bold implies an irrevocable condition, which is not the case.
Secondly, the term in red is not the case. Very little has been "printed" and let us be clear that I mean physical cash and coinage. Electronic representations of "money" do not count because they are more or less perfectly controllable. Any account on the planet can be zeroed-out with a few keystrokes, given the right authority. This is a VERY different proposition, say, from having to drill out the locks on a safe deposit box for example.
Electronic currency has changed the game fundamentally precisely because it can be controlled with such absolute authority. All such official currency resides on privately held systems and travels over privately held transport mechanisms, all of which are completely beholden to common authority. In other words, the currency systems of virtually the entire globe are under what is effectively one-world government. Depending upon the desired result, currency volumes can be adjusted up or down with very little red tape, and were a true emergency to arise what little now stands between the actor and his result is probably swept away in the wake of nation-destroying threats to those that might question such action.
The actions taken in Cyprus was but a taste of that which Theye are capable. With no legitimate process whatsoever, 10% of every bank account on that land was sheared off the top and there was NOTHING the account holders could do about it. Fiat was issued. Fiat was received. Fiat was obeyed. Account holders were left with emptier wallets and no recourse. What does one call
that? That "reclamation" of currency would have a deflationary tendency, all else equal. Naturally, all else is not equal in the face of the USA and EU issuing countless trillions of dollars and euros. But that could change in a flash. Not likely to here in the USA because we are still well armed, but the Euros were almost completely de-balled decades ago and have no means of defending themselves against tyranny much beyond harsh words and perhaps burning a few of THEIR OWN neighborhoods.
Let me rephrase my question about fiat currencies never deflating. When has any currency that has its monetary base expanded by alot, ever deflated? In other words, when has printing money ever led to deflation? I suppose you could say the dollar was a fiat currency back in the 1930s but we didn't expand the monetary base.
You are operating under false premises - the days where physical currency was the only currency for the most part are long past us. Today that is changed with electronic representations that are created and eliminated with the stroke of a keyboard. People cannot take their electronic currency and stuff it into a mattress because Theye will not allow the individual such access and control over it, which is another fundamental difference between physical and
centrally controlled electronic currency (bitcoins are more like physical cash in this sense). You are compelled to store it on Theire mechanisms; transport it over Theire mechanisms. This places the fundamental control in Theire hands, not yours. Oh yes, you can take your card and go to Lowes and buy a stove or some drywall screws with it. That is high-level, superficial control. The fundamental control remains with Theire agents, the banks. When Theye decide you must be sheared, they can do so in any of a number of ways, resulting in a net loss of purchasing power for you.
For example, Theye decide you have not paid sufficient taxes on "income". Theye assess you $X and either you pay up or perhaps they simply raid your accounts. You have NO control over this unless you convert all your electronic $$ into physical. Not very difficult to do... unless you have a lot in savings, in which case the bank keeping your holdings will give you endless shit. They will be happy to cut you a cashier's check on the spot, the only practical thing you can do with it being to deposit it into another bank, but they will be endlessly stubborn if you ask for cash. I know because I have experienced it first-hand, and for paltry amounts no less - not more than $25K. It was only after a good 1/2 hour of argument that they relented and opened the cash drawer and this was back ca. 1995, before things REALLY got out of hand.
Inflation and deflation are the direct effects of the ratio of the money supply to the universe of things that can be had with that money. If the ratio goes up, we experience inflation. If it goes down, deflation - again, all else equal. We can see this at work in microcosm for a given product of commodity. If the market demand for a given item changes drastically, the pricing becomes reflective of that change. If demand for widgets goes up, the price increases and does the opposite where demand lapses - all this within limits of course, which we need not discuss here as it is a subject area in its own rite.
I will also repeat what I have written here before: there is NOTHING fundamentally wrong with a fiat currency. It is human behavior that destroys the viability of any currency or money. When people behave properly, monetary bases remain sacrosanct and people flourish. When they behave poorly, monetary bases are defiled and people suffer loss. It is that simple - literally. There is nothing magical in any of this. The telltale of Theire perfidy lies in the synthetic complexities that have been imposed upon the simple conceptual construct of a monetary system. By introducing such endlessly convoluted crenelations upon what is at its heart a very simple concept, Theye have managed to hoodwink the vast majority of people into believing that that basic system is itself hopelessly complicated. In so doing, the latent lassitude of people has predictably guided the mob into the position of trusting the "experts" with their own testes because it was all too much trouble to become knowledgeable themselves. Brilliant move.
