You're kidding right? A business has the opportunity to sell the same amount of units at a lower price while eliminating wasted time contemplating the tax implications of every decision, eliminating the accounting costs, and freeing up funds and time to improve their business and they won't do it? if they don't there is another business down the street that will, and then they're OUT of business.
You're kidding, right? A business has an opportunity to trim staff no longer needed, increase profit margin, improve its P/E ratio, make its stock prices go up, and you think it is just going to give all that away?
A few businesses might let some of that go in the more competitive discount and retail sectors, but do not expect to see them rush out to dump their bottom line in the consumers' laps.
As for another business down the street, some streets are a lot shorter than you seem to think, especially in smaller towns, and more specialized business sectors.
When Walmart drove Kmart out of our town, we no longer had to watch for falling prices.
But from all accounts, wages will drop far quicker than prices.
Fixed costs will remain the same, your mortgage amount, student loans, your car loan, are not going to drop 20% just because your wages did.
New rules make it much harder to declare bankruptcy.
With so many "mining" their equity, it wouldn't take much of a bubble deflation to put them upside down in their mortgages, with less ability to pay them off. Things could spiral pretty quickly from there. More income (percentage wise) spent on mortgages and car loans means less disposable income to spend on anything else.
You are talking about deflating an entire economy.
Think about that. Think also, what that would do to GDP and our trade deficits.