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A further factor which one must account for is that in the current globalized economy you cannot have hyperinflation within a vacuum. Before you reached such a scenario of uncontrolled inflation, the Japanese economy would simply implode. Their banking sector would collapse, their bond markets crumble, and their export sector go into seizures. They would hyperinflate, and this would drag the rest of East Asia into a devaluation crisis.

In the American and European economies, the price of East Asian imports would plunge - thereby acutely magnifying the already marked deflationary pressures of uncompetitive trade disadvantages. American and European corporations would need slash their own prices to compete with those of East Asia - particularly Japan in this instance, which would displace China [or rather reinforce China] as the chief global source of deflationary pressure.

Europe would plunge into crippling deflation almost immediately, and the United States would shortly thereafter sink with the global shift. East Asia will hyperinflate; America and Europe will deflate; this will rebalance the global economy in the worst possible way......

You lay out the case for deflation very well. A few questions come to mind:

If we experience a deflationary implosion, we will basically be broke. Won't East Asia's export driven economy suffer under that scenario as well?

Foreigners have huge holdings of US stocks and bonds, esp bonds. Won't they dump their US assets as the markets crash, putting downward pressure on the dollar and therefore, upward pressure on the prices we pay for imported goods? They might attempt to support the dollar or debase their own currencies for the purpose of maintaining their export levels, but how successful will they be?

Even if consumers & businesses do not borrow, the Fed can still expand the money supply by buying bonds for example. The cure may be worse than the disease, but the point I am trying to make is that it seems that they could create inflation if they so desired. What if they bought every US bond in existence? What if the government ran huge deficits and the Fed simply monetized it?

The deflationary scenario you outline is what needs to happen to purge the excesses you noted. Will that be allowed to occur given the political ramifications? The deflationary forces will occur first, and there will be intense political pressure to do something. The "something" is likely to make things worse, IMO.