I agree with Puzzleman that inflation, i.e. an increase in the money supply, is happening right now.

There is no deflation. The money supply is not falling, consumer prices are not falling. The only thing that is falling are asset prices which were bid up by excessive credit growth. The "deflation" in assets prices is caused by deleveraging, i.e. a reduction in credit. Assets prices that have historical norms in relation to wages will go on falling until the correction is complete, e.g. real estate.

However, the monetary base is expanding by an unprecedented amount. These are the "reserves" of the banking system and new lending is leveraged of these reserves (rather than savings as should be the case). So the potential is for a massive amount of "re-leveraging" to occur at some point.

What will be the result of this re-leveraging? Well, I would say the consumer is tapped out and will not be willing to take on debt, so I'm sceptical of a debt led consumer boom driving up consumer prices. What is more likely is that the banks will deploy all their reserves in financial speculation, with leverage, so I would expect stocks and commodities to be driven higher.

As these people on Wall Street are not stupid, I would imagine they will be particularly attracted to gold and silver and the mining stocks. So, the inflation blows up a new bubble in the precious metal mining stocks and we're quids in. So patience is the key.

What will follow from this who knows but Peak Oil is on our doorstep and that is the real game changer. An energy starved economy cannot grow yet the PTB will continue to goose the system with more dollars to try and force it to, as the fiat debt based system cannot sustain itself without perpetual growth. This is, I believe, when the hyperinflation kicks in with depression conditions the norm until we get a nuclear fusion reactor to work and built a few hundred...