Inflation or deflation? The truth:
I keep reading that we are experiencing deflation because of plummeting house prices etc. Actually, this further reinforces my argument that we are in a severely inflationary environment. Housing prices, unlike skyrocketing food and energy prices, are priced into reported inflation. Even with freefalling housing priced into the figures, we still have inflation (and no, dropping rates of reported - or even real - inflation do not mean deflation). Yes, house prices and securities, plasma TV's and even labor are all becoming more affordable. But education, foreign currency, precious metals, and foreign securities are all enjoying a long-term secular bull market, all helped by the falling value of the dollar. Just because houses are deflating from bubble valuations or people can't sell luxury items to working families anymore doesn't mean the dollar is increasing in value.
The value of the dollar is decreasing, and that is inflation. If you define inflation and deflation differently than that, feel free. I don't care. But the value of the dollar is decreasing, and that decrease is accelerating because of an ineluctable political tailwind. And regardless of reported inflation, gold and silver will be sought so desperately that those who invest in them will increase not only the number of dollars in their net worth, but their purchasing power (because the flight to inflation hedges drives up the prices of gold and silver faster than the rate of inflation, real or reported).
Does the current environment fit someone's definition of "deflation"? Almost certainly. Does that matter? Not remotely. The only thing that matters is real value. The real value of homes is soon to be reflected in their prices, and the same goes for the dollar, as priced vs. metals.