Most of the world economy is "one accident away from a deflation trap," charges Ambrose Evans-Pritchard, international business editor at The Daily Telegraph, adding that the emerging markets crisis unfolding before our eyes may provide the push that will send the global economy into a deflationary disaster.

Central bankers are tightening the money supply even as their economies come closer a deflationary spiral.

The World Bank warned in a recent report that the tapering of the Federal Reserve's stimulus may slash money flows into developing countries by up to 80 percent for several months.

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"While this adjustment might be short-lived, it is likely to inflict serious stresses, potentially heightening crisis risks," the report states.

Panic may spread the crisis as people wonder if capital controls will be enacted and which country is next.

"Emerging markets are now half the global economy, so we are in uncharted waters," Evans-Pritchard writes.

International Monetary Fund (IMF) Managing Director Christine Lagarde warned that the eurozone is especially vulnerable, he points out.

"We need to be extremely vigilant," she said at the World Economic Forum in Davos, Switzerland. "The deflation risk is what would occur if there was a shock to those economies now at low inflation rates, way below target. I don't think anyone can dispute that in the eurozone, inflation is way below target."

Indeed, much of Europe is already experiencing deflation if tax increases are not counted, Evans-Pritchard argues.

"Europe has let its defenses collapse behind a Maginot Line of orthodox monetary policy."

Approximately $4 trillion of foreign funds flowed into emerging markets after the U.S. financial crisis — $470 billion due to the Fed's stimulus, according to the IMF. How much investors will yank out and how quickly is anybody's guess.

Emerging markets nations, including Turkey and South Africa, raised interest rates to slow fleeing capital, even though steep rate hikes will probably terminate economic growth. Some are in relatively better shape; others "are already spinning out of control," he says, naming Ukraine, Argentina and Thailand.

Minneapolis Fed Chief Narayana Kocherlakota has argued that the Fed must do more to increase inflation in the United States, which is running below its 2 percent target.

"We're running the risk of being content with inflation running consistently below our target. That's inappropriate," Kocherlakota told the Financial Times.

"Doing something as surprising and drastic as cutting interest on excess reserves below zero — I think that would be a very powerful signal of the seriousness with which we take the 2 percent target for inflation."

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