That's because it's happening right now - the Z1 report tells the tale. An FRB system simply cannot withstand deflation of any kind. Like a shark which must continually swim forward, the aggregate credit-money supply system must continually expand or the entire house of cards comes crashing down.
If it wasn't for the combined Fed & Treasury activities, we'd be living Mad Max right now. Still, all they've done is kick the can. Nothing has been solved, so unless 'organic' lending activity somehow miraculously picks up from increased final demand, we still have our date with destiny.
Also, I think it's unwise to correlate our lack of deflation since the US went off the gold standard and embraced full fiat. Something about winning WWII, industrial dominance, abundant domestic oil reserves, a cohesive mono-culture, high incomes rather than debt financing consumer spending, and the $USD acting as the global reserve currency might have had something to do with it.
Demographic change, off-shoring, domestic resource depletion (what, we're up to 2/3 of our oil now coming in from foreign sources, 1/2 of which are hostile to the US?), and staggering unpayable debt loads are all conspiring to bring this little party to an end.
Oh, they can just pull a 'mexico' and lop a few zeros off and start over.
A global currency is the real goal.
Bingo, we have a winner!
Don worry. The US of A will come out on top once again.
Why do you think the Fed 'stores' other countries' gold for them? Because when TSHTF, the gold will stay right here. We'll pass out FRN's as 'settlement'.
The U.S. Screwing all the countries that nobody else will...
Help me out on that --I though we were talking about an FRB that all major economic economies have had since the 1600's enduring huge bouts with deflation.