Look at the data, not the literature. We are not having deflation, at best we have had a small period (1 yr) of disinflation, which will be followed by growing inflation in the years to come. Even with their economy contracting massively, inflation in the UK ROSE from 3% to 3.2%.
Govt bond prices sound alarm on future inflation
LONDON, April 20 (Reuters) - Rising demand for inflation-proof government bonds shows investors are fretting about longer-term price pressures as governments try to spur growth by boosting the money supply, despite more immediate fears of deflation in the short-term.
Demand for index-linked debt, which protects bond investors' capital against erosion by inflation, has risen in recent months after all but drying up in late 2008 when investors piled into safe-haven conventional bonds as recession fears rocked markets.
While some of these moves are due to a correction in inflation-protected bond prices after they tumbled late last year as liquidity thinned, worries of the inherent inflationary risks in governments pumping trillions of dollars into the financial system to bolster growth are growing.
In the euro zone, this has translated into financial markets factoring in annual inflation above the European Central Bank's target ceiling of 2 percent from 2014 onwards.
"Markets are looking much further forward and they are getting a bit more worried about what all these measures will mean for the future," said Elwin de Groot, economist at Rabobank in Amsterdam.
"Long-term inflation expectations have been rising in the past four months, but besides liquidity issues, this essentially remains a story of increasing worries among investors that a period of low inflation or even deflation will be followed by a period of high inflation."…
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Here is some blurb re the UK inflation. Nearly everything cost MORE! Thats NOT deflation.
Consumer Prices Index (CPI) annual inflation was 3.2 per cent in February, up from 3.0 per cent in January.
The largest upward pressure on the CPI annual rate came from food and non-alcoholic beverages. The effect was widespread but the largest individual factor was the price of vegetables which rose by more than a year ago. There were smaller upward pressures from fruit, mineral waters, soft drinks and juices, bread and cereals, and meat, partially offset by coffee, tea and cocoa where prices fell this year but rose a year ago.
There were further large upward pressures from:
• recreation and culture where, overall, prices rose by more than a year ago. The effect came mainly from a wide range of games, toys and hobbies and from computer games and preschool activity toys in particular.
• transport costs, mainly due to the price of fuels and lubricants which rose by more than a year ago. The average price of petrol rose by 3.2 pence per litre between January and February this year, to stand at 89.5 pence, compared with a rise of 0.1 pence last year. Diesel prices rose by 2.1 pence per litre this year compared with a rise of 0.5 pence last year. Within this division, there was a partially offsetting downward effect from air fares, principally from European and long-haul routes.
• furniture, household equipment and maintenance with upward effects from major appliances and non-durable household goods.
• clothing and footwear where prices rose by more than a year ago.
The only large downward pressure on the CPI annual rate came from housing and household services. This was due to gas and electricity bills which were unchanged this year but rose a year ago when many suppliers increased their rates.
END
And all this during a massive economic contraction. Your not going to see deflation till the money supply is CONTRACTED.
