We are right where we were in 1980, when gold was about to lose over 90% of its purchasing power over the twenty years from 1980 to 2000. Debt was extremely high at the beginning of that period. The creation of debt is inflationary but, once created, the existence of debt is deflationary. Gold will lose over 90% of its purchasing power over the twenty years 2011-2031 for the same reason. Japan, the ultimate balloon of the last century, is now in its 20th year of deflation. The Fed is fighting to keep the air from coming out of the debt balloon too fast. Whether the Fed wins or loses, prices are going down, down, down. Mortgage debt, education debt, pension obligations, goverment debt mean retrenchment, retrenchment, and asset sales.
Someone sold you a bill of goods. No. Gold is at 1/10th of the valuation it had in 1980. We would have to go up 400% to get to where it dropped to. And really, degt is highly inflationary. That is where our money comes from. The debt means nothing and will never be paid. It is just a source of infinite money creation. That is why debt default and bailouts are even more inflationary. They set the created money free,or double it.