***An overheated economy is only one of many factors that may cause inflation***
I hate the term “over heated economy”. They say this is inflationary but at the same time don’t look at the continuous influx of money created ex nihilo (from nothing) by the banking system. The economy isn’t growing; it’s being malinvested and of course it becomes inflationary when the structure of production is distorted and the relative drop in the interest rate signals that there is more capital available for investment than actually exists. Perpetual inflation isn’t necessary for economic growth, and in fact it necessarily sets in motion the eventual bust.
***Respectively, a hobbled economy doesn’t necessarily cause deflation.***
And deflation doesn’t necessarily cause a hobbled economy.
As for what’s going to happen in our current economy, I believe the fed and the feds are dead set against deflation and will do whatever it takes to keep prices rising. There are many deflationary factors to be sure, but the central planners are trying very hard to prevent the necessary corrections in the economy from taking place, and thus trying very hard to cause inflation.
Bingo.
ALL of the central planners (international bankers, Western governments) want inflation. They need it to sustain themselves. Therefore it will happen. This isn't "Japan."
It's happening already. Despite the fact that the few who are qualified to borrow money won't (and the rest can't), interest rates are going up. Few are lending, few are borrowing. Few want to "buy" money, yet the price of "buying" money (i.e. interest rates) is going up.