I agree that this is a very good essay. The subject of the state and its desire for inflation and phobia of deflation is a rather interesting one. It makes sense that the state likes to inflate so that it can fund projects without resorting to traditional taxation. What is less clear is what effects deflation has on the unfunded liabilities with which the modern state has encumbered itself. I haven’t had the time to think through the implications of deflation on these institutions. Could it be the case that deflation makes these liabilities utterly and completely unserviceable, even in the short run? In a similar, but market oriented vein, how do pensions and annuities fare in deflationary times. It would appear that deflation makes the burden heavier, just like debtors feel a greater debt. Am I missing something here? What could be done to ameliorate the burden justly? Contracts with a cost of living scale that can go both up and down? Contracts in gold (this seems very plausible)?