This has been bugging me for a while. I was first a deflationist then turned inflationist. It seems like one problem we have in discussing this is that many deflationists argue about money supply. They treat credit as money and define inflation or deflation as monetary events: expansion or contraction in the money supply.
Inflationists seem to be more fixed on prices. They tend to argue inflation or deflation as a price phenomena. That difference makes meaningful understanding or arguing difficult.
That being said, I tend to agree with pencilneck. We don’t exist in a vacuum. While debt being destroyed causes our money supply to contract, we can still see a drastic increase in prices as the dollar falls and we import goods. Inflation or deflation? Guess it depends on your definition.
My hardest point to swallow about inflation is how does the inflation make it to wages. In the 70s we had unions to push the wages up. We don’t have that now. We have globalization to push them down. For deflation, when I see so many prices rising precipitously, it makes me wonder about that argument.
I tend to agree with the itulip guys that we are headed for inflation. I like their idea that we will try to blow another bubble in alt energy and/or infrastructure. But using methods other than credit.
