"...since 1971, every currency is now a fiat [no connection to a commodity, other than faith in itself] currency resting soley on the authorization or sanction of the government..."
"...how many dollars you have is not important...what really matters is what your money will buy..."
The reason for the future inflationary concerns are the trillions of dollars of increases in the money supply to get over this economic crisis and theories like Mr. Friedman's:
"...what happens to the money supply today affects what happens to income in the future...[with about a 6-9 month lag to change output, historically, and a 12-18 to possibly 24 month lag to change in prices]
The above comment is the reason to head this post: "Inflation is a Monetary Phenomenon"
...BUT...
"...the only countervailing force to increased money supply is increased output..."
And because of the "great Recession" that precedes this massive influx of money, there is plenty of room for increased output. In his book, Milton Friedman explains the causes (and the cures) for inflation:
Causes:
(1) Government prints money to finance their activities - excessive money supply is the main cause
(2) Quantity of good and services (GDP, that averages in normal times about 3%) don't increase at same rate as money supply increases
(3) Wages increase faster than GDP (but this is NOT a cause, but rather a result of inflation)
(4) Oil price increases can reduce output and, therefore, increase prices
(5) A full-employment policy by the Federal Reserve
Cures:
(1) High unemployment offsets inflationary pressures usually (note: we did have stagflation (high unemployment and inflation) in the late seventies and early eighties but oil price spikes had much to do with this also)
(2) Index government borrowing to inflation (this has started with TIPS, I-Bonds, tax tables and other items indexed to inflation). Social Security wage base, however, was set in 1993 and never indexed to inflation, nor the AMT (Alternative Minimum Tax) and not capital gains taxes - the most egregious.
As an aside, Robert Hetzel in the April 25, 1991 issue of the Wall Street Journal stated that TIPS and other inflation-protected securities if ["if", since in 1991 they had not been offered] "...issued by the government could provide a continuous assessment of 'expected' inflation by the market..." [these products, may indeed, help contain inflation just by their existence and TIPS have only been around since 1997, after the inflationary '70's and early '80's].
(3) Higher taxes or more public borrowing, excluding the debt of federal agencies and the Federal Reserve.
By the way, it is important to understand that the $12 trillion in debt is not all held by the U.S. public. Some is held by foreign nations, yes, but some is also held by other government agencies. How can that be? For example, social security has taken in trillions of dollars more than it currently needs to pay out benefits and this excess is then lent out to other agencies. This is not necessarily as bad as some say (you often hear that all that excess in the social security trust fund is IOU's). Realistically, however, investing that excess cash in the government is safer than keeping the cash in a bank account or investing it in the stock market.
(4) Simply the public pressure of the largest economy in the world unlike the governments of Argentina, Bolivia, Brazil, Chile, Mexico, Israel, Germany and others that all experienced hyper-inflation at some point in their histories.
(5) Statistics (historically, of-course):
U.S. Debt as % of GDP (after WWII 106%; 1967 = 32%; 1991 = 46%; today hovering at 85%)
Long-term government debt's average maturity of its bonds (1946 = 9 years + 1 month; 1976 = 2 years + 7 months; 1990 = 6 years + 1 month). Because of the U.S. average debt maturity in years, a larger debt may be handled by issuing shorter maturities at lower rates and provide the ability of the U.S. to have a debt as a percentage of GDP that is higher than other countries would be able to handle.
Yes, this also has been studied extensively, and here is a 46 page study on the subject if you are interested: http://www.people.hbs.edu/lalfaro/maturity.pdf