Wow, you definition of inflation is even wrong.Inflation happens when people are willing to pay more for a good, and people charge more.Is a McDouble for a buck inflationary?How about compared to a $9.75 steakhouse burger?Do McDoubles ever actually run out? If they never run out, are they constrained by supply?See the problem with your simplistic understandings on how money works, leads to all sorts of mis conclusions in the end. Almost all of the thought problems that people spout are very small scale. They involve local money, and supplies that actually run out, and demands that exceed local supply. But they do not model large markets well at all. Markets where supplies don't run out, markets of plenty, markets of wealth, and global markets. We live in a world of those bigger markets. And applying small market thinking and principles on large markets, is dangerous, and often wrong, and if right are accidental. Ignorance of the marketplace is the blind squirrel, and he occasionally finds a nut.The raise of the price of housing was because the percentage of average income to purchase a home went down dramatically because of low interest rates charged by the fed. The speed of the correction to the usual percentage was caused by the flood of competing customers, often dropping the supply dramatically below demand.Extra points for what this is called. And at the same time, this whatever you call it, did not mean that McDoubles all of the sudden cost a buck. Or that the prices at wal-mart keep coming down. What do I care what something costs? I do not even negotiate what I am willing to pay, I pay what they charge. What is that called? If I save money at the end of the day, and I purchase everything I want and need, what is that called? Should I pay more, because I have more? No, that is silly.Would it have been different if there was a gold standard?Ok, where did the money come from, and why would sane people do this.A lot of connecting the dots, and you will find that most of the money came from money market accounts. *Most* of the money in money market accounts is not owned by individuals, it is uninsured money that is kept there because of corporate bylaws. You know like Starbucks, and Microsoft, and New Balance, and Universal Studios.You know there are two ways to have a bank run. One is when people try and take out more than the bank physically has. Like It's a wonderful life.Another is when assets are marked to market and a balance sheet is forced, and it is shown that the bank is insolvent.When the bank is insolvent, it means there is no money for the depositors.Except for insurance, that probably covers you.But doesn't cover, Mcdonalds, Tasty Freeze, or 7-11.What happens when this happens to all of the banks at the same time.Besides a date like January 1st, it also means the end of economy as we understand it. All the companies go broke at the same timeIn smaller economies one nationalizes the banks, removes the debts, sells them off for the benefit of the people, and reopen the banks, sometimes with new money.When that happens in the US, it turns out that is too big to contemplate, so we try and stabilize the banks by providing capital, We change balance sheet laws, not to show truth, but to hide it, and we pray that nobody will notice until the turd has passed through the system. But trust me, this is far better than any other action or disaction.We are paying dramatically, for what was massive theft of money market accounts. By essentially creating lies, and insuring with no reserve those lies, and people saying ok, because of fees. This is not a failure of the fed, other than keeping interest rates for too low for too long, it was a failure in regulation, in that very basic economic principles were ignored and allowed what turned into massive end of the world level of theft.A gold standard wouldn't have helped. Gold standards fail too for a variety of reasons, including runs on the bank.The fed makes sense, so long as sensible principles are applied.Alan Greenspan summed up the problem. "I was wrong".And most of the people here don't even come close to understanding what he was talking about.