What sort of "Flation" is coming?
Inflation
Inflation is the easiest symptom for all to agree on. In spite of the official rate of inflation, the data leading to these rates are skewed. Items such as food and fuel (the foremost essentials for most everyone) have been removed from some calculations, rendering the results meaningless. Studies that include these data report figures are roughly three times more than those without.
Hyperinflation
Historically, whenever a country reaches the level of indebtedness that now exists in Europe and, particularly, the US, hyperinflation becomes almost a certainty. It can correctly be argued that, as long as the government does not continue printing money at such a rapid pace, hyperinflation may be avoided. Trouble is, once a government does get to the present state, they almost always continue printing money.
The remaining question is when it may kick in. Governments can often delay the inevitable by continuing the same borrowing that is the root cause of the problem.
Due to continued monetary injections (such as the US's Quantitative Easing), any projection for a date for the onset of hyperinflation, in order to be meaningful, should be for the outside date of the onset. Whilst a prediction of the earliest possible date is likely to be inaccurate, the outside date proves far more useful.
John Williams, of Shadow Government Statistics, currently predicts 2014 as an outside date. His reasoning is as succinct as it is well-taken:
Why 2014? While inflation is far from being out of control at the moment, the U.S. dollar is relatively strong, due to the euro crisis, that can change rapidly as global markets and domestic holders of the U.S. currency begin to flee the dollar, along with dumping dollar-denominated assets. Fiscal, systemic-solvency and economic conditions are deteriorating markedly, with a confluence of unstable circumstances likely to come to a head within the next year or so, placing extremely heavy selling pressure on the U.S. dollar and, before 2014, setting the stage for hyperinflation.
Deflation
But what of the deflationists? There can be no question that some of the most reliable economic forecasters in the world today speak regularly of deflation. More confusingly, they often sprinkle their sentences with predictions of inflation, hyperinflation and deflation. So, which is it? Have we returned to the question posed above, "Is the predictability of whether there will be inflation, hyperinflation or deflation as impossible as deciding whether it will rain in London on Christmas day?"
In a word, "no." For anyone seeking to understand the maze that is economic study, a principle often overlooked (due to the fact that it is rarely stated) is that inflation, hyperinflation and deflation can follow one another in the same catastrophic economic period. In fact, they can exist at the same time.
If the reader finds himself scratching his head at this concept, he is in good company. Even the very best of forecasters do the same. Whilst one may be regarded as a hyperinflationist and another may be accurately described as a deflationist, each one is fully aware that the coming period will contain elements of both. It's just that each tends to focus his study more on one aspect of the Greater Depression than the other.