I think it is commonly acknowledged that rep inflation is occurring on SO. As opposed to this meta question, I don't think the inflation is a problem.
I think the real culprit is that a lot of users seem to gain moderator abilities and randomly close/migrate questions. The problem has already been raised here.
Therefore, I am proposing that moderator abilities should relate to the reputation in the system. An example:
There are 106 total reputation points in the System and 1000 users are registered, making an average of 1000 points per user. In reality, < 50% of the users are below that threshold: the top 10% of users have 25% the reputation.
Moderation Capabilities should be restricted to the users with the top 20% the rep. (All numbers are completely hypothetical. A detailed analysis of SO reputation would provide clearer hints)