Depression... Inflation... Destruction

Depression... Inflation... Destruction

 There is no debate. Inflation is coming. But first, we've got to endure a nasty depression. 

Depression now. Inflation (and possibly hyperinflation) later.
The formula above is a working hypothesis. And not a bad description of the world we've been in since the financial markets blew up in 2008. The private sector is deleveraging and the public sector continues to leverage up (at least in the U.S.).
In the near term, defaults, cutbacks and unemployment in the private sector have a depressing effect on the economy. This leaves the feds trying to take up the slack...
If Japan is any indication, this period could last for many years. Ben Bernanke said as much in his report to Congress yesterday.
But in the long term something's gotta give. The private sector is bound to find solid ground sooner or later. And then, if not before, the public sector will need to be deleveraged. That is when it should get interesting. Because a counterfeiter never defaults. Instead, he prints up the money...
... which is where the inflation comes from.
At least, that's the idea.