“What I’d like to understand is why so many people oppose the fight against deflation”
I think there is a disconnect on what is inflating and deflating. They leave out food and energy which is in everybody’s budget. When you go buy gas at $4.00 a gallon and not that long ago it was $3.00 it is hard to wrap your head around the deflation side of the argument. Same thing at the grocery store. I’ve yet to hear anyone say “hey remember when a dozen eggs was five bucks? WTF!
Most people see prices creeping up in their day to day lives and don’t picture the problems with deflation. I’m not even sure I entirely understand why they fear deflation so much more than inflation.
Maybe you were thinking of the article's "better gauge of inflation comes from the core PCE deflator, which excludes food and energy", but what he was talking about was problems with the Fed's CPI-U which does include it. I can argue that food'n'energy are down. Crude oil's now at $104 compared to $140 a few years ago, along with current producer food prices lower than a year ago. OK, so those are cherry picked numbers that really don't prove food'n'energy deflation, but they do show how those prices are a bit goofy.
That may because we haven't had a bad case of it in 80 years.
Back in the bad old days of gold money our periodic deflation meant consumers stopped purchases because of expected future price cuts. Meanwhile producers stopped hiring because of expected falling sales income. With people out of work and factories shutting down everyone defaulted on loan repayments with their increasingly precious money. Deflation is unemployment, bank failures, and business failures.
My understanding of the ‘fear’ of deflation is that it discourgages producers from producing as they face diminishing returns on production. This, it is believed causes a slow downs in production, layoffs, etc. which only exacerbates the underlying issue -a lack of demand/consumption. Outsourcing is also a cause of deflation and I think is a larger cause in the present then it was in past deflation threats. Both causes are countered by over-issuance of the currency (inflation) and most wester countries have been doing this for years to offset deflation.
Unfortunately, western governments have been doing a poor job stimulating consumerism preferring to invest in banks rather than consumers. Instead of programs like WPA and CCC the government’s ‘investments’ are going to banks in the QE ‘stimulating’.
Without a strong consumer class as the currency devaules the citizens will react. We’re seeing the beginning of this with reaction to O-care. It is certain to get worse. Think French Revolution.