I would like a discussion on the pros or cons of deflation. Please add in your 2 bits.
I do not believe that either inflation nor deflation are bad if they are predictable and within a small percentage. It is the rapid inflation and deflation or unpredictability that causes massive failures.
Deflation is inherent in the system that we live in. As humans, we try to produce everything more efficiently. It's what drives us. It frees us to deal with new or unexpected problems. Deflation is obtaining more value for less work. Deflation is the increased production efficiency of goods, which efficiency we should strive for.
The typical argument against deflation is that it prevents spending, which causes a collapse of the system. This argument is self-defeating: if deflation causes collapse of the system, there is no reason to hold onto the coin that causes that deflation (and therefore deflation doesn't exist). Usually deflation is blamed for economic depressions, but instead, it's normally the other way around: massive inflation had preceded these depressions until production and investment capacity had become unsustainable and untethered to real value, which caused massive distrust of such systems. That distrust then led to deflation to find the ground-floor of value. Deflation is often the by-product of the poor preceding policies that perpetuated perennial problems, but was not the cause. Policies often try to alleviate this poor policy pain by inflating their currencies, but it is difficult to fight fire with more fire (but not impossible). Deflation can be a healthy, but painful, correction of these systems (as we see in bitcoin boom-bust cycles). It's better to have good policies in the first place instead of having to worry about how to make a 'soft landing'.
Another argument against deflation is that people who were first into the system benefit more than people who enter later. This happens with any system, and inflation does not remove this problem. New amounts of money, the new inflated amounts, are normally awarded to those who maintain power over the system and causes similar, if not worse, rewards to those at top. In this sense, inflation is worse than deflation because it allows an artificial group to remain at the top, rather than allowing that money to be distributed throughout the system. Inflation without proper policy does not change this problem of deflation.
A usual argument is that inflation allows people to pay off their debts. This is only true if people's salaries rise with the inflationary measures, which you are lucky if this holds true. The problem with inflation here is that the new inflation amounts of the currency are given originally to close allies, rather than through broad distribution among all classes. It is difficult to force all businesses to keep up with inflationary policies. Companies must have also received inflation-related gains to be able to award their employees with similar (or usually lower) gains. Employees also have to continue to receive those matching gains to benefit, so they must have enough soft power within their organisations to argue for those gains, otherwise they do not receive higher compensations. It is far too easy for companies higher in the chain of companies to keep their inflation-given gains and not pass them on, and for companies to not pass those inflation-given gains to their employees.
Are there other arguments to inflation or deflation? I'm interested in hearing more discussion on this. Thanks.