At a seminar I gave in August 1999, I told my disbelieving audience that I had some good news and some bad news. I said the bad news is that the US markets are going to fall 75% and are not going "get up". I then said that the good news was that it wouldn't occur until later in the next decade, around 2009 or so. When they asked what made me make such a prediction, I said simply that a deflationary period would engulf the US around that time and cause sub par economic growth for perhaps a decade, taking down all asset prices. My research at the time had suggested that was a likely outcome. The path we took to get here was a little different than I anticipated, but we are now here. It is undeniable. The great debate going forward will be not be whether INFLATION overwhelms us but simply when. I believe those that hold the "inflation now" position may be surprised by what happens next. What we can expect now is for banks to hoard the billions the Treasury is about to pay out. It will not be re-lent as the Fed expects. Who are they going to lend it to? If all of these loans are bad now, who's standing in line to borrow these replenished funds? Hedge funds? GM? I can tell you who.....no one. And there in lies the problem. Just ask Japan. Sure, the banks will remain liquid, and perhaps solvent. But if the problem is a giant debt bubble that has burst, what are the odds that it'll be replaced by another wave of massive lending on a scale large enough to replace the burst bubble? Zero to none. That's why deflation will still reign. LOTS of people are going to disagree with me on this. Keep it civil when you do. Remember this time. It is history, my friends, and it is our time to live it.