For those who are sure deflation will be the outcome, it is important to keep in mind that in a fiat monetary system, central bank can always generate inflation if it wants to. So the real debate is if things get really bad such as serious deflation taking place, is it politically acceptable to print money to generate inflation? I don’t know the answer to this question. If I had to guess, I would say yes. If a serious deflation in fact happens, nobody wins, not even the prudent renters.
Also, the current FED chairman is not a stupid guy. He spent a considerable amount of his career studying the Great Depression. With the new auction system FED introduced lately, he has shown his willingness to try new things to handle a crisis.
