Inflation, and deflation described for my friend Freaky.

I have a very long time good friend here on Steemit, who I've know also from Youtube. He was actually asking me about the word "Deflationary". I replied with the question "What do you know about Inflation"???

Well I'm going to explain a few things about these words in my opinion, and how they will affect us in our daily lives really soon.

Inflation. The official definition is... "ECONOMICS
a general increase in prices and fall in the purchasing value of money."

I always use this story to explain inflation.

Suppose you dropped off 10 people on a deserted island, and gave them a box of little white sea shells. These sea shells were to be their money on the island. Each person has a hundred shells to begin with.

One Guy climbs the mountain, to the river, and fetches back water. Another wades into the ocean and spearfishes for fish. A lady begins climbing trees and gets coconuts. Sheila might say you have to give her 2 shells for a coconut. A fish might cost 4 shells because Bob has to stand in the sun all day spearfishing and risking shark attacks. A jug of water is more expensive, because Henry makes such an arduous journey up the mountain to fetch it. In time, everything finds a balance. Each person earning what they are worth, and getting what they need. All 10 of them!!!

Then one night there is a horrible storm!!! The wind is blowing, the waves are crashing, and pouring rain..... Everyone wakes up to find that the storm had blown, and the waves had washed thousands and thousands of shells up onto the Beach!!! They all go out and scoop them up...... What happens to the price of a coconut? A fish???

What you have to understand is that it's not the value of coconuts, fish or water that's gone up..... The value of our little white sea shells went down!!! A massive increase in shells made each shell more worthless!!!!!

In the beginning, each little white sea shell was worth 1/4 of a fish, and half a coconut. This was due to the supply of shells, and the demand for them. After the storm there were so many shells, that one of them was barely worth a small bite off of a big fish. If the storm had washed dump trucks worth of shells onto the beach, then you get what's called "Hyper-Inflation." A fish might cost thousands of sea shells.

That's what we're facing now in the physical World. Too many sea shells!!! Here's the number of US Dollars in the World.

We're told that there isn't any inflation to speak of, but we're having a lot of what's called "Stealthflation" It's kind of hidden. A pound of coffee is only 10 or 12 ounces. A mayonnaise jar is slightly smaller, and so forth. It's all because the "Federal Reserve Bank" is creating too many sea shells!!!

Deflation is just the opposite. It's caused when one person on our island gets his or her hands on almost ALL the sea shells, and hoards them. The other 9 people on the island don't have any sea shells left, and nobody can afford to buy any fish!!! Bob eventually quits fishing, because it's not worth the effort. Nobody could buy them if he had them. Eventually everyone is laying under a tree hungry, and thirsty.

This is why Crypto-currencies have such a bright future. By design, there are only so many created per month. As the value of "Regular" money like Dollars, and Euros goes down because they've printed too many. The value of things like Steem Dollars will go up compared to those other kinds of money!!!