Here is a little piece contributed by "Anon on a California Mountain" from the remarks section that is worth reading. He sees deflation as being the bigger monster at the present time.
History has shown over and over that it is always debt that destroys empires and countries (except for war, climate change and migration away from failing crop lands).
Usually after a financial crisis you have a number of sovereign defaults (because of all the bailout, stimulus and drops in tax revenue). The cycle: a government goes into excessive debt that can finally no longer be managed or serviced... it can't get money from tax revenues, trade or the economy, so... in desperation it raises taxes and becomes very aggressive towards its citizens... this slows growth even more... capital flees and so do citizens... the downward spiral worsens... more desperate measures from a government that is impossibly in the red... and then it is spin, crash and burn. Egypt, Rome and Greece are a few examples of that.
We Americans have now entered into this cycle. The deflation and deleveraging can't be stopped. The correction/recession/depression can be postponed but never avoided... and it will be more painful and destructive in direct ratio to the length of postponement. We've been on a credit expansion cycle since the mid 40's. It has ended and is beginning its contraction cycle now.
Bernanke is back in and we will be the worse for it. Don't worry about the Federal Reserve printing 2 Trillion into the money supply. With 30+Trillion of derivatives and other assets that are collapsing, 2T is a mosquito bite. Inflation worries are premature. This is deflation.
Figure out how to survive, in an environment of high taxes, slow to no growth, oppressive government, lower standard of living, poorer infrastructure and lower levels of social services.
Anon On A California Mountain