Inflation as a monetary phenomenon has already occurred. It has now worked itself into almost every kind of assets price. Question is will it keep occurring. There are good arguments on both sides.
If we have inflation that means that the supply of dollars keeps increasing, but so to does demand. If we have deflation that means that regardless of supply there is less demand.
All those returning foreign dollars have to go somewhere, the question is where? If they end up in the bank accounts of the public at large, that would be highly immediately inflationary. If they stay locked up in the financial markets ergo they go into bonds, that will just keep the musical chairs game going a bit longer, we’ll have to postpone this discussion for a bit.
If that returning money goes into the equity markets, it will get lost as the economy is slowing, and prices for equities almost certainly have to come down as they are based on high growth rates which aren’t sustainable. In this case we are still right back at deflation.
