Look around the world as ArabianMoney always does in the summer because the excessive heat of the Middle East drives us all to seek out cooler climates, and you very quickly realize this year that the main issue is deflation, not inflation.
Gas prices are falling with the oil price. Indeed, falling commodity prices are taking the pressure off input prices across the board.
The demand destruction of widespread economic contraction is doing the rest. Shop discounts are deeper to sell goods.
Hotels are struggling to sell rooms. Upgrades are cheap. Hire car companies can only give away their more expensive models.
Pricing muscle is low. Customers who overpaid in advance will not do so again, or certainly not next time.
Yet central banks are not unaware of this situation, or in any doubt about how dangerous a deflationary spiral could be to the global economy.
Deflation makes all those debts in the world even bigger and more impossible to pay off. It threatens the banking system with destruction.
By printing money central banks can offset any amount of deflation. The problem is that fine-tuning this process is equally impossible.
All they can do is to keep on expanding the money supply until deflation is checked and then try to undo its bad effects with tighter monetary policy.
Central banks will likely act is coordination. This should help to make their action more effective but it does create a universal flood of money that will definitely do something big.
From past experience of much lesser crises we know that monetary inflation once unleashed is terribly difficult to control.
Putting two and two together and we get a climate in which the rather mild deflation of prices we see now will more than likely be followed by higher levels of inflation.
From an investment perspective readers of the ArabianMoney investment newsletter (subscribe here) will be familiar with the argument that we are making for buying real assets, preferably in this deflation phase.
Not doing so will leave fixed incomes like pensions or bond coupons particularly vulnerable. On the other hand, precious metals would perform very well and probably outstandingly so. Gold and especially silver are our top tips (click here).
Stay ahead of the investment curve by realizing what deflation really means. Things will get cheaper for a while and then prices will go up again and then some.