As long as the government can print fiat money, they are inevitable. Deflations do have some salutary effects. The monetary unit goes up in value, which encourages savings, increased work and providence and thrift. Since wages will not decrease as quickly as prices in a non-manipulated labor market, the purchasing power and savings of those working increases, thereby increasing their standard of living. Since increasing purchasing power will also mean that debts actually go up in value, reckless borrowing will be curtailed.
The negatives are that collateral for loans in nominal terms will decrease. Also, the increasing value of debts will cause certain debtors to default and go bankrupt.
Contrast these negatives with inflation as dictated by the Fed. Real wages go down since wages don’t rise as fast as prices. The real rate of savings sinks since the inflation adjusted return often becomes negative. Reckless borrowing is encouraged as debtors will be able to pay back their loans in depreciated dollars. The trade value of the currency will go down until it collapses.
Finally, the inflationary depression will become a deflationary depression, as banks will not loan money because as it loses value there is little demand for it. Eventually interest rates will skyrocket and the there will be great monetary destruction thereby increasing the value of the currency. Unless the monetary creation increases to try to counteract these forces. Then you wind up with the Weimar Republic or Zimbawe.
Choose your poison, I would rather has deflation than inflation, which is the debasement of the currency and the destruction of society.
It also encourages lower production, higher unemployment and decreased investment.
Since wages will not decrease as quickly as prices in a non-manipulated labor market......
(Allow me to finish)..... unemployment will increase.
the purchasing power and savings of those working increases, thereby increasing their standard of living.
It's true that the 75% of the workforce that still had jobs during the Depression enjoyed lower prices.
Since increasing purchasing power will also mean that debts actually go up in value, reckless borrowing will be curtailed.
Intelligent borrowing will also be curtailed.
Contrast these negatives with inflation as dictated by the Fed. Real wages go down since wages dont rise as fast as prices.
But wages rise faster than prices.
banks will not loan money because as it loses value there is little demand for it. Eventually interest rates will skyrocket
If there is little demand for money, interest rates will fall, not rise.
Choose your poison, I would rather has deflation than inflation
That's only because you don't understand deflation.