“It is a deflation. The entire world bet on a large scale inflation that refused to happen, that is what the financial crisis *is*. Now they all have to repay all of their short dollar positions in more valuable terms instead of less.”
Yes, exactly. The big question is...Why this is so hard to understand?
The global warming central prediction of ice-age level warming hasn't changed in 110 years, from the infancy of the science behind the notion, made without any data to speak of. The Malthusian prediction of the relationship between population and properity was false on the evidence when it was first proposed over 200 years ago, but continues to be maintained in the face of the most dramatic possible contrary evidence over that interval. Marx's predictions of the inevitable collapse of capitalism have been wrong for 160 years, but men in the street call every decline in stock prices a vindication of it. Its basis was discredited ages ago, its empirical prediction of declining wages was wrong instantly and falsified on an epic scale over the intervening period.
Ideologies are not thoughts. They are intellectual diseases.