That presumes that government CPI accurately reflects credit availability and the velocity of money...which Japan's CPI does *not* do.
If you want to see deflation in Japan, you can look at currency values (27% deflation in the last 10 years)...or you can look at the value of real-estate, say, for the past 20 years.
From 1989 to 2009, Japanese real-estate has deflated 50%.
Deflation.
Japan's Nikkei stock market average has also deflated over the past two decades.
Deflation.
Japan's velocity of money has likewise deflated over the past two decades. Deflation.
Deflation. Deflation. Deflation.
But...if you support Schiff's efforts that have cost his investment clients so dearly over the past several years (more than 30% losses), you are pretty well limited to arguing that Japan somehow didn't see any deflation and that the U.S. didn't see any deflation when FDR was spending so much New Deal money back in the 1930's.
That's a sad side of History to be on, however. Schiff is clueless. He's cost a lot of people a lot of money, and he's been wrong about every economic downturn in History except the one inflationary 1972-1973 recession.
You're shifting ground now. Just about everybody, except apparently you, agree that the most objective yardstick to measure the rate of price deflation is consumer price index. That measure in Japan does NOT show 27 percent deflation.
The fact that some prices fell (or rose) is beside the point, at least if you are claiming overall deflation (are you?) Some price declines in particular goods, even during the 1970s, have always declined and, of course vice versa. A credit shortage does not necessarily equal deflation. If you don't believe me, try borrowing money in Zimbabwe.
Your original post did not specify deflation in real estate prices. It was general statement about deflation in Japan as a whole with no, ifs, ands, or buts. Do you stand by your original post or don't you?