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Peter talks with a caller about the possibility that a credit contraction necessarily produces deflation similar to the Great Depression.

Peter differentiates between deflation in terms of value of goods compared to the price of gold and inflation in US dollar terms because the prices of items in a global market will still be going up in terms of US dollars.

Peter argues that the US is more comparable to Argentina (hyperinflation), rather than Japan, where there has always been a high savings rate.