Money is created when people / businesses / government obtain loans and spend the proceeds. The amount of these loans looks like it will be dropping precipitously, as the various borrowers default on loans and lenders become increasingly wary of making new loans.

The government may try to bail out lenders, but even with all of this new money, it will be difficult to replace what has recently been available.

DelusionaL,
I have read that using the Case-Schiller numbers so far, about 1.3 trillion dollars of 'hallucinated wealth' (hat tip to JHK) in the form of US residential housing equity have evaporated already. Mish Shedlock, Enrico Orlandini, and other respected analysts believe that the deflationary cascade will overwhelm the capacity of the US gov't credit rating to bail out.

We shall see.

Errol in Miami

It is difficult to understand how and when the inflation will change over to deflation. For one thing, it happens simultaneously. (Food and energy prices have been rising while suburban real estate equity has been vanishing.)

The thing to keep in mind is that most of our assets only have full value if we're not all trying to sell them at the same time.

Another key point is that as state budgets go into deficits, they will likely choose to defund pension plans and sell off assets at bargain basement prices.

For starters, everyone should check out Chris Martenson's Crash Course. Just google:

end of money crash course