The recent trend over the past several months, particularly with the onset of tapering talk, has been a marked increase in the discussion of deflation. Gold, TIPS, as well as almost all commodities have been sold in anticipation of the coming deflationary environment. The question is: Have we really entered a disinflationary environment or have market participants simply lost patience with the potential for some type of resurgence in pricing pressure. To be sure, there has been scant evidence of a shift in the conditions necessary for a pickup in overall inflation. These would include an expansion, or at least flattening, of the money multiplier, some evidence of a pickup in overall loan demand, as well as an expansion of lending spreads at the bank level. However, a read of the financial press would suggest that the probabilities of such events occurring are essentially non-existent. However, if the events of the last several years has taught us anything, it is that building a portfolio anchored to the belief set that tomorrow will look like today only compounds the risk should some type of inevitable change occur. Those that are bracing themselves for deflation might also take notice that outright deflation (negative core rate) has never occurred in this country.