Here’s a terrific article from Bloomberg on exactly what is happening with the economy, and what we have to look forward to, al pi derech ha’teva (according to the rules of nature).
Deflation prophets in the West are in for a rude awakening. Eastern fire will turn Western ice into a mess, and 2012 looks like it will be the year of melting. The fuel for the fire is coming from deflation-fighting stimulus programs, such as that of U.S. President BO.
Of course, throw a major black swan event into the mix, and the process described will likely greatly accelerate.