Admittedly, the prices of things we don't need or could do without are going down. This is caused by supply and demand mispricing. People didn't need McMansions so housing is taking a huge hit, or a new car every other year so the auto industry in this country is dying , or a 42" flatscreen in every room of the aforesaid McMansion. The prices of vanity items like that may go down for years, but nobody will care. There are larger concerns ahead. People need to eat to stay alive.

The only way overindebted nations can get out of a debt that is beyond payment in current terms is through inflation. Inflation is not just a scare. It is a means to repay debt at lesser value that is regularly resorted by nations in this situation. Currently most nations on earth are in this situation and are competitively debasing their currency to prevent a trading disadvantage. The monetary base has been vastly increased already to achieve this very end. Why has gold has gone up against every currency on earth for the last 7 years? If deflation was the major driver then gold would hold its value or rise only slightly while the stock market would lose 90% of its alleged value. Bonds should do well in such an environment, but it's painfully obvious their price cannot go up from here. The only reason they ever got to where they did was governmental interest rate swap derivative manipulation and the recent peak on a deflation scare. They have experienced a 28 year long bull market.... are they to rise forever? Is the right risk reward price for a loan of money in this environment 3% or 4%.

The prices of things people need on a daily basis have already started going up, in fact they never stopped going up. My utilities are higher, gasoline for my car is higher, not as high as it was, but it will get there again soon. Food is more expensive, etc.

Once people, as a whole, get over the confusion of pricing with some stuff going down while other stuff goes up and they recognize that everything they need is going up and up and up in price (and it will start going up faster as the dollar continues to weaken) they will start stockpiling food and goods they can use in the future with today's money.

Banks pay diddlysquat for interest; a far better investment (currently paying about 10% -20% a year) is to buy and store canned goods on an ongoing basis. If cash is king why aren't the banks trying to attract it?

Next the monetary velocity, which is an important ingredient, will begin increasing. And suddenly, just like throwing a switch people will "get it." Everywhere hyperinflation has occurred it is said to have come out of nowhere. It seemingly strikes like lightning. Once people "get it" they will spend the money as fast as they can get it for real things. No one will hold that stuff called money. It will be looked upon with contempt even as people are forced to use it.

The engine from the previous post is already turning at high rev's and making a lot of power but the tires haven't yet gripped the road. When they "hook up" with the road the car will rapidly head down the road.

The only thing which could prevent this is a total worldwide systemic collapse. Then there will be no need for an inflation/deflation debate; survival will be the only concern.

Survival at that time will not depend on things monetary.

P.