your simplistic model does not account for enough variables to draw any meaningful conclusions
There is no "model" in what I stated above - just facts. The fiscal deficit is the difference between government liabilities issued and extinguished in a given period. These liabilities are financial assets in the private sector. In other words, they are slips of paper with a government stamp and some notional value arising from factors such as the government's willingness to accept them in tax payments and their usefulness as a medium of exchange. In contrast, food, minerals and labor are real resources which have an intrinsic value in that we in fact require them to live (as well as to produce goods, develop military power, etc.). Financial instruments and real resources are fundamentally different entities.
I would disagree - we do, in fact, face real inflationary pressures
CPI has been low and stable for decades now. We still see significantly inflationary pressures in food, but energy prices are beginning a long downward trend due to recent exploitation advancements, and the hefty allotment of real resources which we took from the natives^W^W^W^W are lucky enough to possess. In manufactured products and services, there has been strong price deflation due to globalization and technological progress. The financial crisis also precipitated a major deflationary episode worldwide as commodity prices and employment collapsed. Neither the global or national economies have yet made up for what was lost, and remain depressed far below their former output and growth paths.
There has been an effective drop in real wages for decades
Yes - this is a strong deflationary pressure. Outright consumer price deflation has been rare in developed economies, which is explained by behavioral studies demonstrating that people (employers and employees) actually prefer layoffs to wage reduction. Thus we get persistent low inflation and unemployment rather than widespread deflation.
Meanwhile, people often "feel" that inflation is high, even though it isn't, because it is actually becoming harder for them to afford purchases. However, this should be blamed on wage suppression, and not inflation which as stated is both stable and low by any historical standard.
There are three major sources for deflationary pressures within the domestic US economy (also commonly called demand leakages). Namely, they are productivity growth, population growth and the trade deficit. The combined inflationary pressures of private credit and federal deficits are insufficient to produce either moderate inflation or reduced unemployment against them.