Your post mentions deflation about 20 times including many things that aren’t deflating (please call my insurance company and tell them to lower my rates). What you didn’t talk about is inflation. The issue is not what the economy will do, you are basically correct about that, but what the boneheads in government are doing / want to do. They are using inflation by the standard definition of expanding the money supply to try to counteract credit deflation. The result is obvious, the first stages of hoardiing and grossly excessive inventories of commodities and other raw materials as the world anticipates the inflationary boom that is coming. If we don’t have that boom, then we can kiss the financial system goodbye, so my money is on the boom, but I am also ready for some deflationary dips as well (got cash).
The money supply isn’t expanding.
Pause.
Oh sure, you can post graphs of *cash* increasing due to government printing/borrowing...
...but the “money supply” is all available credit plus all available cash.
And credit has been destroyed faster than cash has been printed.
Thus, even while cash has increased, the overall cash+credit money supply has shrunk.
Deflation.
*oh, and you should shop your insurance around. Rates have plumeted, especially on term life insurance.