If you think about it for even five seconds you'd realize why a Debt bomb is deflationary.
Imagine for a moment that you were a bank, and you gave out loans and then a bunch of them when they came due either did not pay or called and told you they couldn't pay and tried to work out a deal where they paid less than you expected and let's say it was thousands of your clients who did this at the same time, eventually you'd look at this and realize you issued a lot of Big stinky shitty bad debt and what you would do is issue a lot of new requirements to get any additional loans income verification check people's credit ratings, etc you would begin to go into a Credit Crunch.
as banks tightened their requirements, fewer loans are made and liquidity becomes scarce because the Debt bomb exploded.
Meaning, there are fewer dollars out there now chasing the same number of goods and services.
so the debt bomb explodes and the value of the dollar moons as a result because eventually people cut back on goods and services and so suppliers are reluctant at first to lower prices but eventually in order to claw back lost market share they relent.
as banks tightened their requirements, fewer loans are made and liquidity becomes scarce because the Debt bomb exploded.
Meaning, there are fewer dollars out there now chasing the same number of goods and services.
so the debt bomb explodes and the value of the dollar moons as a result because eventually people cut back on goods and services and so suppliers are reluctant at first to lower prices but eventually in order to claw back lost market share they relent.
