> interesting to observe the other factors (wage and services) deflate as the theory predicts The theory doesn't predict deflation. Any trade imbalance must b

> interesting to observe the other factors (wage and services) deflate as the theory predicts The theory doesn't predict deflation. Any trade imbalance must be balanced out with an equivalent flow of money in the opposite direction. This means the quantity of money, and by extension the price level, will change according to the balance of trade. Therefore the theory predicts inflation in countries that have a trade surplus, and deflation in those that have trade deficit.