Deflation? Inflation? It's all SAD

The financial and investment crisis is stressing people out, therapists tell Marketplace. You might call it Societal Anxiety Disorder.

SAD to say, wealth managers and their clients can't even be sure of what to be anxious about.

Deflation has reared its fearsome head. Mark Trumbull in The Christian Science Monitor explains why increasingly valuable dollars lead to SAD:

Back in the Depression era, economist Irving Fisher coined the phrase "debt deflation," to refer to a period when many debtors are trying to reduce their liabilities, or leverage. When borrowers are de-leveraging all at once, prices for assets such as homes or stocks can fall below what would ordinarily be their fair value.

Moreover, if deflation becomes a broad-based trend that consumers expect to see in everyday goods, they may delay purchases in the hope of getting an even better price later.

Long term, inflation seems inevitable. As this educational chart from Wikipedia shows, deflation was mainly a feature of the hard-money era. Ever since the Great Depression, paper money has been printed fast enough to keep inflation alive and well.

CLICK ON CHART FOR LARGE IMAGE

What about it? Should wealthy investors worry about deflation, inflation or both?