Here is a very interesting interview with an economist from the Austrian School, Friedrich Hayek. His popularity has waxed and waned over the years (he died in 1992), but his views on inflation and deflation may again become relevant. Contrary to what Chairman Bernanke has written, Hayek's economic view does not favor continued inflation in order to stave off any deflation. Instead, Hayek wrote:

"There is little need to take precautions against any practice [i.e. deflation] the bad effects of which will be immediately and strongly felt; but there is need for precautions wherever action [i.e. inflation] which is immediatley pleasant or relieves temporary difficulties involves much greater harm that will be felt only later . . . It is particularly dangerous because the harmful aftereffects of even small doses of inflation can be staved off only by larger doses of inflation. Once it has continued for some time, even the prevention of further acceleration will create a situation in which it will be very difficult to avoid a spontaneous deflation . . . Because inflation is psychologically and politically so much more difficult to prevent than deflation and because it is, at the same time, technically so much more easily prevented, the economist should always stress the dangers of inflation. (Hayek, The Constitution of Liberty, pp. 330-333, cited by Joseph Salerno, Quarterly Journal of Austrian Economics, vol 6, no. 4) and in the Feb 2006, "The Gloom, Boom & Doom Report"

So, given that the Hayek view is so at odds with the current Chairman of the Federal Reserve, it is perhaps useful to read this interview with the man which took place in 1977. Here are some excerpts from that introduction/interview which is published in 1992 in Reason magazine:

From the article introducing the interview with Hayek:
On the fundamental questions of economic policy, the debate pitting Professor Hayek of the London School of Economics against Professor Keynes of Cambridge University sparked a memorable confrontation between classical economics and the new-fangled "macroeconomics" of Lord Keynes's 1936 General Theory.

The Keynesians swept academic arguments in a virtual shut-out. With Keynes's death in 1945, in fact, Hayek (and the classical trade cycle theory) quickly faded from public view. Economic policy entered a golden age of "demand management" in which the business cycle was rendered obsolete, and Hayek moved out of economic theory altogether.
...
From the 1920s until the '40s, Hayek and his countryman Ludwig von Mises argued that socialism was bound to fail as an economic system because only free markets--powered by individuals wheeling and dealing in their own interest--could generate the information necessary to intelligently coordinate social behavior. In other words, freedom is a necessary input into a prosperous economy.
...
But within the economics profession it is no secret that Hayek was an academic outcast, a throwback, a marginal character whose ideas had been neatly disproven to all reasonable men in the scientific journals of his day.

But then something bizarre happened. The late 20th century decided to provide a reality check on the academic scribblers. The 1960s and '70s saw post-war prosperity ignite into an inflationary spiral in the very countries that had embraced Keynesianism (mainly the United States and the U.K.). Shocking to the peer-review process, which had rigorously proven otherwise on many occasions, full employment could not be maintained via off-the-shelf Keynesian bromides. The traditional therapy-stimulate consumption and penalize savings with a healthy infusion of government deficit spending-was now being refereed by the real world, and the results were found "nonrobust." The macro models of Cambridge, Harvard, Berkeley, and MIT fell apart, and by the 1980s the very solutions that Keynes had hustled were being painfully thwacked as precisely the root of our troubles. Suddenly the old classical medicine-savings, investment, balanced budgets, competition, and productivity growth-were popularly claimed to be the economic-policy goal of good government. Even the politicians, so bubbly to receive Keynes's prescription for government spending as the magical elixir with which to treat an ailing economy, had publicly abandoned Keynesianism.

And the possibility of rational economic planning under socialism? Yes, we ran that experiment as well. The Third World tried it and promptly dropped to income levels last recorded in the Pleistocene Epoch. The Second (Communist) World tried it in massive police-state doses and...well...dissolved.

From the interview itself:
Reason: So trade cycles are caused solely by government monetary authorities?

Hayek: Not that directly. As you put it, it would seem that it results from deliberate mistakes made by government policies. The mistake is the creation of a semi-monopoly where the basic money is controlled by government. Since all the banks issue secondary money, which is redeemable in the basic money, you have a system which nobody can really control. So it's really the monopoly of government over the issue of money which is ultimately responsible. Nobody in charge of such a monopoly could act reasonably.
Reason: You have written that the period from about 1950 to 1975 will go down in history as the Great Prosperity. If the Keynes thesis is incorrect, why the tremendous economic success? Why, for instance, haven't we experienced a hyperinflation on the order of Germany in 1922?

Hayek: Because the inflation in Germany was not for the purpose of maintaining prosperity but was forced upon them due to financial difficulties. If you inflate for the purpose of maintaining prosperity you can do so at a much more moderate rate.
The prosperity did last longer than I anticipated. I always expected its breakdown, but I thought it would come much sooner. I was thinking in terms of the collapse of the inflationary booms during past trade cycles.

But those collapses were due to the gold standard, which put a brake on those expansions after a few years. We never had a time where a policy of deliberate expansion was unlimited by any framework of monetary order. We've come to an end only when has been seen we cannot accelerate inflation so fast that we can still maintain prosperity.

Here is a link to the entire article/interview:
http://www.reason.com/news/show/33304.html
Mike