Inflation increases asset prices and increases inequality. Deflation reduces asset prices and reduces inequality.
Keynsians do not like deflation because people save money during a deflationary period, and saving money reduces aggregate demand. They will tell you that deflation is equivalent to a recession for that reason, and point to the great depression as an example.
I would point out that after the deflationary period of the great depression, the US became a much more equitable society, and was followed by three decades of healthy growth (until bretton woods ended...).
Money has a natural ebb-and-flow. When people have no savings, they are less willing to part with money. The price of money (the interest rate of borrowing) increases. When people have lots of savings, they are more willing to lend it out. The price of money decreases.
These ebbs-and-flows were small when commodities stood for money. Fiat currency allows banks to practice price controls with money, so the ebbs-and-flows are more extreme, and last for longer periods of time.
Deflation rewards those with savings, because their savings can purchase more over time. Inflation rewards borrowing, because borrowers can repay a loan with money that is worth less. Understand, then, that the US government is a debtor. A deflationary period would be intolerable to them, because they would not be able to make payments on their debt. Expect inflation to continue apace, regardless of its effect on normal people.
Keynsians do not like deflation because people save money during a deflationary period, and saving money reduces aggregate demand. They will tell you that deflation is equivalent to a recession for that reason, and point to the great depression as an example.
I would point out that after the deflationary period of the great depression, the US became a much more equitable society, and was followed by three decades of healthy growth (until bretton woods ended...).
Money has a natural ebb-and-flow. When people have no savings, they are less willing to part with money. The price of money (the interest rate of borrowing) increases. When people have lots of savings, they are more willing to lend it out. The price of money decreases.
These ebbs-and-flows were small when commodities stood for money. Fiat currency allows banks to practice price controls with money, so the ebbs-and-flows are more extreme, and last for longer periods of time.
Deflation rewards those with savings, because their savings can purchase more over time. Inflation rewards borrowing, because borrowers can repay a loan with money that is worth less. Understand, then, that the US government is a debtor. A deflationary period would be intolerable to them, because they would not be able to make payments on their debt. Expect inflation to continue apace, regardless of its effect on normal people.