For those of you who do not follow the economic and financial world, I am letting you know that there is a very widespread nearly universal view that deflation is bad. National central banks do everything possible to create inflation today. They all believe we are at risk of a deflationary period.
This affection for inflation and hostility to deflation is universal. The fear of deflation is deep and abiding for the U.S. Federal Reserve Bank as well as the European and Japanese central banks.
Unfortunately this is a blind prejudice in the economic world without any basis in historic fact.
Japan has survived a deflationary period for the past 20 years. Japan's deflation was caused by a real estate collapse and a subsequent unwillingness of badly damaged banks to lend.
The United States and most of the rest of the world have experienced a deflation in consumer goods prices for the past 20 years, thanks to Chinese productivity. The exception to deflation is often domestic union cartels as in the case of America. We have an American inflation that offsets the real deflation. The offsetting inflation occurs in cartel based domestic industries: education, homebuilding and medicine.
Inflation favors borrowers and deflation favors lenders. When you borrow $100 in a deflationary period you pay it back with $100 that cost more to you (it can buy more) and is worth more to the lender. Since most voters are borrowers and most borrowers are consumers, economists and politicians have always favored inflation which benefits borrowers rather than lenders.
However the real effect of inflation and deflation is a redistribution of income in the society. Since consumers in the middle-class spends a much higher percentage of their income on consumption and the wealthy spend a very small percentage of their income on consumption, falling prices of consumer products, deflation, favors the middle-class and lower earners.
Inflation is good for rich people. Inflation occurs in times of economic turmoil which usually benefits capital and the wealthy who are intensely active in the investment world.
If you want a more even income distribution, support deflation.
When this complex, arcanely difficult, intellectually stressful idea of the benefits of deflation finally sinks in with economists and central bankers they may look more favorably on deflation. The same is true for voters.
I don't expect that to occur in my lifetime.