Are we going to have extended deflation?

I was watching the program Wealthtrack on public television tonight.  I usually do not watch this program because it is investment oriented, but heard some interesting ideas tonight.  The guests were David Darst of Morgan Stanley and Robert Kessler.  There was considerable discussion about investing in US Treasury notes and it was noted that we can expect a period of deflation for a considerable time.  There has been talk about the feds raising interest rates and stuff, but very good arguments were made as to why that really wasn't likely to happen and why we will not have inflation as many of us have been led to believe.  The main reason given was the unemployment situation - if there is no demand, then there is nothing to fuel inflation.  It was also noted that this is what has happened in Japan for many years.  There was also discussion about the deficit and it was noted that our current deficit percentages are double what they were during the depression era.  Interesting implications for the real estate market.