Inflation and deflation, what is the difference

I've heard a lot of chatter that the world is about to enter a deflationary vortex, with all its recessionary implications. Well, a recession is certainly possible, I'll give you that. But deflation?

The US went through a decade of falling prices during the 1930s. The consumer price index for period between 1921 and 1940 is illustrated above. As you can see, prices fell heavily, particularly after 1930.

However, consumer prices in the US over the last two decades have risen more or less continuously. In fact, prices in 2008 are up about 35 percent compared to 1998.

Deflation is a rare thing, particularly when our central banks are run by such irredeemable inflationists like Bernanke and Greenspan.