An epic battle between the forces of inflation and deflation has been waging since 2008. Although no knockout punch has been delivered, inflation still has the upper hand.

Analysts who have been predicting deflation for years -- even decades -- continue to be proven wrong. Their counterparts in the inflation camp have correctly anticipated interventions by the Federal Reserve. Whenever a deflationary collapse threatens to unfold, the Federal Reserve rolls out massive doses of monetary stimulus.

Yet every time an outbreak of raging consumer price inflation seems imminent, weak demand in the global economy dampens the inflationary pressures. That brings out deflationists who rehash their deflation "just around the corner" forecasts.

The monetary definition of inflation is an increase in the supply of money and credit relative to goods and services in the economy. By that definition, inflation is running rampant. Since 2008, central banks created more than $12 trillion in new cash.

High rates of monetary inflation don't always translate directly into real-world inflation in the form of higher prices. Although gold and silver have advanced substantially in the past 10 years, commodity and consumer prices have yet to really take off in the manner that inflation hawks warned they would. Instead, the monetary inflation created by the Fed has largely accumulated inside the banking system and financial markets -- with little wealth trickling down to ordinary wage earners.

Here's how Barron's columnist Randall Forsyth recently described the situation: "central bankers' conjuring, for all of the paper wealth it has created, has produced much less than expected in terms of jobs and output ... whatever inflation has occurred has been mainly in asset prices, which has failed to produce the general benefit predicted by monetary officials."

The government-published consumer price index has lagged behind the Fed's 2% target in recent years. As has been repeatedly documented, the government's self-serving CPI number understates the sorts of price increases many working Americans face. Average residential rents and health care costs, for example, are outpacing the 1.5% "official" inflation rate.

That aside, even the unreliable CPI calculation shows that consumer costs remain on a steady upward trend.

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For all the talk of deflation in recent years, it's remarkably absent from the actual data. When deflation made a brief attempt to take hold in late 2008, the dip in price levels that occurred only brought the CPI back to its primary ascending trend line.

The 2008 crash in oil and other commodities followed a massive multiyear run up in real assets. But all that tumult shows up as little more than a blip on the long-term CPI graph.

Meanwhile, interest rates continue their multidecade march lower. In July, the yield on the 30-year Treasury bond fell to an historic low of 2.1% (with the 10-year falling below 1.4%). In some parts of the world, long-term interest rates are at zero or even in negative territory.

Deflationists argue that central banks are running out of tools and will eventually lose the battle against deflation. But recent events have shown that whenever central bankers exhaust all available options, they invent new ones. Such as quantitative easing. Such as pushing rates below zero. Such as buying stocks and other unconventional assets. What's to stop them from stimulating consumption directly through a "negative sales tax" or other form of virtual helicopter drop?

Deflation doesn't stand much of a chance against an opponent that has a limitless capacity to print dollars. The real question is how long relatively low consumer price inflation will persist before giving way to much higher rates. The reason why inflation will eventually become a crushing problem is that debt growth in the economy -- particularly at the level of the federal government -- cannot ultimately be sustained except through cheapened dollars. Even former Fed Chairman Alan Greenspan is now sounding the alarm.

The unsustainable is being sustained (for now) through ultra-low interest rates. A return to more normal rates of interest would trigger a debt-servicing crisis. If the Fed stepped in to rescue the government and other institutions that are too big to fail, it would mean the creation of trillions of new dollars. At some point, confidence in the currency would erode, money velocity would pick up and a massive inflation problem would be upon us.

Something like the above scenario could play out next year. Or perhaps not for several more years. It's impossible to predict exactly when or how the next big monetary trend will unfold. There may even be another short-lived deflation scare in the interim. But the real, serious long-term threat to wealth holders isn't deflation. It's inflation.

Holders of bonds and cash risk massive real losses in the years ahead if consumer price inflation ticks just slightly higher from here. A diversified portfolio of inflation-resistant assets should include physical precious metals at its core. When confidence in paper money is lost, owners of hard money will be among the big winners left standing.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.