In a deflationary environment, people buy less stuff they don't need today, which leads to a higher quality of economic growth.
The problem is that if I won't buy it for $100 today because I can buy it for $50 tomorrow, I won't buy it for $50 tomorrow because I can buy it for $25 the next day, so you NEVER buy an iPhone
Technology always gets cheaper rapidly. Lots of people seem to buy it.
A 4% annual deflation rate would stop unhealthy debt expansion, which only stimulates short term growth and long term pain.
Higher quality growth comes when real economic value is created through transactions rather than speculation or inefficient investment.
Of course, all those who insist that inflation is a superior state can't explain the economic effects of everyone deciding to purchase today before the prices go up, leading to much weaker demand and production in the future.
Bringing forward spending excessively is just as problematic as send it backward into the future.
People make this kind of tradeoff all the time. I can either purchase a product for $100 from Best Buy, or, I can wait for two days and get the same product for $80 from amazon (or $83.99 and get it the next day).
There are times when I choose to be prudent and save the extra cash and wait 48 hours until the amazon package shows up. Other times, I would prefer the product sooner, rather than later and spend more money for the item.
> This means that no one buys anything
Think about technology. Every day, the cost of a new computer drops by $0.27 on average, let us say, or about $100 per year. Last year's models have a $100 discount, three-year-old machines have a $300 discount, five-year-old or older machines are bargain basement or even negative value (you have to pay someone to haul them away for recycling).
Every day, your money increases relative to the value of computers. Every day, when you wake up, you face an economic choice: You could buy that new machine today, and have it today, or you could buy it tomorrow, and have the new machine and $0.27 left in your pocket.
By your logic, everyone would always choose to postpone buying a computer.
Yet people buy new computers all the time, and have for several decades. How can you explain that? It's a real deflationary market that doesn't have this problem.
Of course, inflation can be very bad, too.