I've only skimmed Mish's long article, responding to Murphy, but saw that he presents this graph to show how we are following Japan's route into deflation. I've seen similar graphs other places - in Krugman's blog, perhaps.
This is what Mish gets, and the inflationistas don't (from his original post.)
Inflation/Deflation Definitions Once Again
Those are my definitions. I cannot force anyone to accept those definitions but they do explain what is happening quite nicely.
- Inflation is a net expansion of money and credit, with credit marked to market.
- Deflation is a net contraction of money and credit, with credit marked to market.
If you are focused on prices or money supply alone, you are focused on the wrong thing.
In a fiat credit-based economy, where credit dwarfs money supply, changes in credit is what's important, not changes in money supply, not nominal changes in prices.
It's as simple as that.
Anyway, when you're right, your right. Mish has this right, and our lack of agreement on just about everything else in the known universe in not especially relevant. The only downside is I'll probably need to go read Murphy's piece of dreck at the Ludwig von Mises Institute, linked above.
Update: After a quick look at Murphy's post, I see that, in addition to the distortion Mish complains about, Murphy also cherry picks a five day span in the $ to Euro exchange rate to make Mish's basically correct argument look bad, and displays a general level of the very special brand of obtuseness that is only found in Libertarians and Austrians. I will admit to some schedenfreude in seeing this exchange. Shame on me.