Is this theory true or false? When home prices are dropping, how can inflation appear, considering your dollar buys more house then before. So inflation ,or HYPERINFLATION can only start once home prices stops dropping, and it starts going up, What scenarios do you think might play out in the future? 1) a. home prices drop around 40% on average from PEAK b. dollar goes up for 2-3 more years c. interest rates for home mortgage goes up to 8% -> then massive home price inflation. 2) a. interest rate for home mortgage stays @ 7% b. home price does not drop c. dollar goes down -> then home price starts to go back up again for massive inflation. 3) Everything except home prices go up (commodities etc.). Massinve inflation on everything except home prices. -------- inflation can not happen while home prices are dropping considering home/mortgages/rents is the biggest expense of every american family. So we are a<b> few years from massive inflation</b> ---------- <b>Unemployment</b> -> Mortgage can't be paid -> Large housing price drops up to 40% in NYC. The layoffs are just starting on wall street, its not going to end here, probably will last at least 2 years , (people don't exactly fire a set of people and rehire them in 3 months (quarter) or 9 months (3 quarters) or 12 months (4 quarters) resulting in mortgages not being paid. resulting in more foreclosures and price drops. So we will be seeing lots more price droppings in nyc in the near future. your thoughts?