Inflation vs. Deflation Argument

Derek, I think what many of the arguments against inflation overlook is the mechanism by which we are getting inflation. If you look at the conventional fiat money inflation such as seen in Latin American Countries or in Africa what happens is the government issues more and more money and the system is immediately swamped with more money and prices react very quickly to the flood of money. In response the people ask for wage hikes. Wage hikes are symptoms of inflation just as price rises are, but the root cause is more money relative to good and services to spend it on.
The situation with the dollar has been different. It is a "time bomb" inflation. The FED as created more and more money but as it is the reserve currency a lot of it has been "soaked up" by foreign governments and foreigners. They have either bought treasury bonds, stocks, or salted it away in a bank account or under the mattress. Only a small part of the massive dollar creation has gone into "circulation" and the inflationary effect of that has been massaged away in the CPI and so people have been lulled into thinking that there is no or little inflation and so they have not asked for pay rises. Their rapidly inflating house prices have served as a way to get funds by way of re-fi to pay for the price rises that are being seen in every day goods. This mechanism in its early stages can easily be confused with deflation.
Many goods are flooding in from overseas but the money created to buy them is salted away by foreigners. This makes it appear that there are more of these goods relative to the money supply which would be deflationary. Flat screen TV’s, electronics, clothes etc have been going down in price due to this effect (you can bet all of these things are in the CPI!).
But then comes the inflation tsunami. There is much talk of diversification out of dollars. As this accelerates the market will be awash in dollars as everyone dishoards at the same time and prices of everything will inflate fast because the supply of money in circulation will suddenly increase relative to EVERYTHING and strikes for wage hikes are going to be everyday news as suddenly people will need to keep pace with huge price rises.
The "no-inflation" crowd or "deflation crowd" are stomping around in the minefield saying "see there are no land mines here!". They don’t realize they are all on time delay fuses.