I used to make the same point but I'm now thinking differently. The emerging trend will be labor demanding wage hikes in Asia/South America. Hence we could see higher prices on produced goods vis a vis' expanding pay overseas while U.S. income remains stagnant. To me it's clear. Deflation of assets and real wages in the developed world coupled with inflation in commodity essentials and "third world" wages. Stagflation.
we are talking about little or no income grow for the population in a period of rising natural resources costs(on real terms). that would be a disaster for standards of living, high inflation would too but not as bad plus these cuts arent like the election driven money supply pump's of 70's. m1 m2 are still growing modestly
Deflation = PRICES falling The stagflation period is over as evidenced by the roll-over in real estate, treasury prices, the $100 ceiling on crude oil, and the likely top put in on gold. Gold was formerly a fiat currency until Nixon changed that, but it's not even that anymore. The greedy gold bugs will watch as their years of paper gains are wiped out in days/weeks by the margin calls coming down the pike. Consumables will hold relative value but will suffer nominal price deflation as well. Stay-tuned...