Oh I agree. Buty here's the thing. Productivity in many industries can offset the increase in money creation by the Fed. Look at computers, semiconductors and many other high-end electronics. How can this happen when during the 90's the Fed was at the press cranking out dollars left and right? It's because the manfacturers are able to produce them much more efficiently and numerously as well.
We also have something called cash-balance deflation occuring. That's when consumers are more prone to maintain high have cash balances relative to income instead of purchasing goods. The Fed can create as many reserves as they want, if no one wants to use the money for purchasing then there is no inflation. It's only when it begins to circulate that money causes inflation. Make sense?
It's only when it begins to circulate that money causes inflation. Make sense? This, of course, is true by definition. However, I question whether there will truly be an absence of borrowers or an absence of commercial bank money creators. It appears like this may have happened in the 1930s, but my sense is that the collapse in the 30's had more to do with the massive bankruptcies and international defaults than conscious decisions to cut back on new borrowing and/or lending. With regard to the Fed cranking out dollars left and right during the 90s, those dollars were used, primarily, to create asset bubbles rather than inflationary consumer prices. But I do take your point that the increased productivity engender by the technology boom tempered price inflation. We are basically in agreement.