Who'd want to invest to expand their factory if the price of their product would be guaranteed to drop every year? Who'd want to buy a house if it was going to get cheaper year after year after year?
If your money is retaining its purchasing power, you will be able to buy a good house at a good price.
Thus, you can buy more house with less money.
[ No, it prevents depressions, ]
Deflation prevents depressions? That's funny. So no negative side effects to long term deflation? How did Japan do with 15 years of mild deflation?
And what caused the deflation-inflation.
Deflation is not the result of a healthy market, it is the result of government inflating the money supply and that inflation wearing off and resulting in a contraction of the malinfestments that were caused by artificially low interest rates.
In a healthy free market economy, you would have a commodity backed money, free 100% backed banking, which would result in capital investment, high productivity, decreasing prices for all goods, including capital ones, employment for all of those who want it.
That is how the market works if it is not interfered with by the Government.
But you wouldn't want to. Why buy a $300,000 house if you know that next year it'll be worth $291,000? If it'll be worth $258,000 in 5 years? $221,000 in 10 years?
In a healthy free market economy, you would have a commodity backed money, free 100% backed banking, which would result in capital investment, high productivity
You think there will be capital investment by GM when they have to lower their prices every year? How much capital investment was there in 2001, when companies only thought we might see deflation? You think people will be eager to buy new cars when they know the prices will drop year after year?
high productivity, decreasing prices for all goods, including capital ones, employment for all of those who want it.
High employment? Who'll want to expand their payroll knowing their goods will bring in less revenue year after year? Who will hire all the people who worked at the least efficient firms that couldn't survive the constant deflation? Deflation helped lead to 25% unemployment during the Great Depression. Why will it be different now?