Deflation Now, Inflation Tomorrow - Long TIPS?

Look at the image above of the US monetary base.

While we may experience a slight bout of deflation as the world markets slowly collapse, once the "pipes" of the financial system are Roto-Rootered, this engorged monetary base is going to materialize in the form of massive inflation.

TIP, the iShares ETF, is a portfolio of Treasury Inflation Protected Securities (TIPS). It is currently trading at $95 versus essentialy a $100 par value. TIPS are like treasuries except they pay a smaller interest payment in return for having the principal increased by the amount of increase in the CPI. They are not adjusted downward for deflation. But, deflation is built into the current price. But the TIPs have a long time frame and are currently pricing in only very moderate inflation if any in the future.

A good long term investor will start buying TIPs at these CHEAP prices and keep buying if they fall more in the next year (as they are likely to do). In a year or less, I predict the discussion will have shifted back to inflation from the current concerns about deflation.