stagg, I responded to your earlier post this morning and was rather brief in my reply so I'll use this post to follow up and also to address your questions in your reply (this will challenge my poor technological skills).
First, there are many definitions of inflation, but Milton Friedman described it best as everywhere a monetary issue. You can read his book "A Monetary History of the United States" but the bottomline is that throughout our history, the price level mirrors the creation of money almost in lockstep. Some describe inflation as the growth in money and credit that exceeds the amount of goods and services, i.e. too much money chasing too few goods, which results in prices increasing.
I believe you are confusing price increases with inflation. Prices can increase as a result of demand and supply imbalances, which are usually but not always corrected by the market (but some prices are inelastic), but also can be influenced by monetary policy. When too much money is printed (like with QE 1 and 2) or too much credit made available (like with liar loans) the result is an increase in prices beyond what the normal supply and demand may produce.
The analogy to automation is fitting In a real market, the forces of supply and demand are always at work. Automation would not succeed if the cost of that automation was more than the labor that it replaced. Similarly, businesses either automate or move jobs to lower cost centers to lower their costs and increase their profit. That's what businesses are in business to do -- maximize profits.
The protectionism argument never wins. Let the market decide the best combination of price and quality. I'll bet there aren't many buyers of Chinese drywall and tires.
Please don't become paranoid like Make Up the Facts. I do enjoy our discussions. I find there are far too many permabulls on these message boards and in the financial media who ignore the serious risks in both the economy and the stock market. The industry is hopelessly conflicted. It is our nature to be optimistic, unless you are like me who grew up a Red Sox fan. Then you learn to expect the worst. As Minyanville's Todd Harrison says, "see both sides."
As for my positions, I'm still about 40% in stocks in my main account, mostly MLPs because of the yield. I trimmed some MLPs and sold SFL and most of my IVR. I probably should have sold more, but as you know selling MLPs to repurchase later is a tax nightmare.