Deflation is bad in the following sense.
Americans and American business are pegged at a much higher cost of living and they are committed to that higher cost of living through borrowing and debt. Most real estate loans ,for example, are valued to real estate prices from 3 years ago. When the currency deflates earning power also deflates. If you have a salary going down because of deflation then you no longer have the buying power to pay your mortgage. The same goes for business.
If the currency starts to deflate business and individuals no longer have the buying power for their financial committments and this brings massive, massive loss of property and no one has any money to buy anything and we get a total collapse which is what is happening.
The problem is that the currency is no longer stable. That is the problem. It is collapsing as we speak at an unprecedented rate because the government is destroying it.