That’s a good article. I have been (and remain) an inflation hawk for a long time. But even I can see a deflationary crisis on the horizon. The question is how will it be dealt with? My guess is that we will see a concerted campaign of additional money printing by central banks. Which in turn creates inflationary pressure.

In general deflation is easier to fight than inflation. All you have to do is print money and inject it into the economy. But once the inflation genie gets out of the bottle it can be hell on wheels trying to get it back in.

Demand or the lack of demand is the result of millions upon millions of individual decisions that are made in the market-place every day.

Why not let the prices fall until there is a ‘natural’ return of demand? 

After all, manufactured items wear out, increasing population requires increasing housing and habitability items and increasing food supplies and increasing clothing and increasing leisure time items, etc. which results in the restart/building of industrial capacity, etc.

Do we need to ‘pump’ money (printed pieces of inflationary paper) into the economy because we lack the ‘intestianal fortitude’ to bear the consequences of the inflationary bubble that was created?

A lack of ‘intestinal fortitude’ will only rsult in further problems down the road as the the actual buying power of personal income and the buying power of third-world nations (needed for food imports) shrinks due to inflation due to the printing of money backed by politicians’ ‘hot air.’