Which will they choose? That is the only question of any importance when looking forward past the next day or two. The answer is clear. They have already chosen and it's unlikely they will change their mind midstream. They are printing (quantitative easing), they are injecting money into the banking system but little has hit the main economy yet. It will. It has to. Meanwhile other country's not wanting their currency to get too strong relative to the dollar will debase their currencies so as to not have a trade disadvantage. Worldwide the currencies have been, are, and will continue to be debased. It is impossible to have a deflation until this mess blows up in their face.

They want to , but the bond market will do its thing too . whatever rate “they” want to print at the bond market can discount in spades.

Inflation is always a monetary event. "Deflationists" miss this point thinking that money and credit are the same and affect the economy in the same way. They don't. I recently read this brilliant example but cannot remember who to attribute it to. If I told you I was going to give you $100,000 you would be ecstatic. If I told you I would give you a loan for $100,000 you would certainly not have the same reaction. Money and debt, likewise, do not affect the economy in the same way.

Looking at the banking system credit can be created in 2 ways , they can lend and leverage savings or they can lend and leverage against assets. If assets are falling in price the ability to create credit is reduced. It will be a battle between gov. credit expansion versus private credit contraction. As long as peoples houses are falling in price and salaries are falling , it has to be deflation in the private economy, regardless if cost of living is going up or down.

After the inflationary blow-up, then the world (if it is still in existence) will see the mother of all deflationary depressions. If you don't believe that bebasement is and has been going on for eight years or so already check my chart # 17 on Stockcharts public listing charts. "Investor charts by PuzzleMan." There is no country on earth big enough to have its currency listed and charted at Stockcharts that is increasing its currncy value relative to gold.

I’ll switch horses if it looks like it is happening but what is your line in the sand? Do you have a Dow or commodity target where you will look at this again?

Re gold , Gold versus any asset or currency is the deflationist Ace in the hole (unless you are Prechter) , gold being money will outperform in a deflation

Generally I’ll stick with the deflationary theme until I see strong evidence to the contrary, if in 6mths time salaries are still frozen/falling , Stock markets are lower then they are now , commodities have not broken out , asset and commercial bonds are lower, then I will say yep, trend still intact. If not then I will reassess. Either way it makes no difference to my investment strategy , my only goal is to be 100% long gold stocks. I would worry for anyone loaded up on base metals and oil as they are making a binary bet , on the other hand my portfolio will do ok and I’ll happily “take the shame”

Btw I agree in the longer it doesnt matter what happens to the short term movements, nobody's crystal ball is that good