Your money lose value in inflation, gain in deflation.

We are not having any deflation, it is all inflation.

Having your wealth in gold, gives you no gain or loss. You only gain or lose in nominal dollars, but your amount of gold will buy the same amount of goods after either the deflation or inflation.

But, the government will attempt to tax you on the "gain, that never was", if you attempt to sell your gold after an inflationary period and allow a paper trail. Beware.

the best way to remember it is this:
if you inflate the amount of money circulating in the system, it is worth less because their is so much of it. like having a hundred thousand gallons of water in the desert, you aren't going to worry if a couple gallons or a hundred gallons get spilled.

when you deflate the amount of money circulating in the system, it becomes more valuable because there isn't much of it left. if you have only 8 oz of water in the desert, every drop is precious to you.

that is what controls the virtual value of our money. and i do mean virtual.

the federal reserve does this with several different tricks it has up it's sleeve.

1.)to inflate the money circulation, they can:

a)print more money by creating a need for more loans. (bail out)
b)lower interest rates.
c)cut taxes. (tax breaks)
d)make loans easier to get for the working class (community reinvestment act)
e)basically anything that puts more money in your pocket.


2.)to deflate the money circulation, they can:

a)create a need to restrict the loans to a bare minimum. (basil 1&2 accord)
b)increase interest rates.
c)increase taxes.
d)basically anything that takes money from your pockets.

hope this helps