Deflation, in and of itself, is nothing more than prices going down instead of going up. So your dollar's purchasing power (in this country, anyway ... deflation and currency fluctuations are different animals, though the existence of the former will certainly affect the latter) will technically go UP.
The problem is that our entire system of capitalism requires prices to rise in order for the economy to grow (within reason, of course. As long as your salary increases in line with inflation, all is well). You invest in something, you expect the price to increase; that's how you become more wealthy. So if company Y, which employs you, starts turning in crappy quarterly earnings reports because deflation is forcing them to charge less for all their products, eventually they're going to have to cut your salary, which pretty much wipes out your extra purchasing power. And that, of course, starts a vicious circle, since people who have their salaries cut buy less stuff, forcing companies to lower prices even more ... lather, rinse, repeat.
This is how depressions can get started. (Emphasis on CAN; this isn't exactly 1929.)
This was formerly true, but W ghanged the yield equation by ending the double tax on dividends. The +G factor in the equation is now diminished considerably. The yield casn now come from dividend pay out and be precisely measured. The G was guessed at and these guesses became the basis for abuse.
Quarterly growth hype can be replaced by a more orderly and near constant dividend payout. The corporations will again be in control and not at hte mercy of analysts with agendas.
Some think the strong dollar is a Clinton construct that made his working man constituents think they were well off. They were actually in a nonsustainable bubble that W is allowing to dissapate.