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Technically, this is not deflation

it's depreciation against the dollar.

http://en.wikipedia.org/wiki/Depreciation_%28currency%29

If there was deflation, that would mean the value of assets within the reference currency is decreasing. (ie, the US is going through a period of significant asset deflation right now as leverage is being pulled out of the system as a result of the financial crisis).

It would be very interesting if you came up with some purchasing power parity metric - similar to what The Economist magazine does for the big mac across world currencies. But you would need something that can be purchased both in the real world with real US dollars and in the virtual world (for use in the virtual world) with virtual currency.

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