While there are certainly fixed costs to being alive (like toilet paper), most people do cut back and this behavior is observed. And when it gets very bad, even those "fixed costs" start being cut - cheaper toilet paper, moving in with mom and dad, etc. Not because they want to save now to buy more TP later, but because when discretionary spending falls, people lose jobs, which further reduces discretionary spending, and more people lose jobs, wages fall (because of the surplus of labor), and eventually it all starts affecting you.
Does that mean my rebuttal carries more weight then?
But since the average American (or, well, citizen of any country) has been consistently observed over centuries not to behave in the manner described by that rebuttal, it doesn't matter. To be fair, the article is simplistic and almost encourages that kind of rebuttal. Your edit essentially addresses that and I don't disagree with it - anyone who is saying that spending "stops" is clearly being silly. It begins as a marginal effect that worsens over time, and TV purchases are the first to go while TP and rent takes a while longer.
But why, if things are getting cheaper?
EX: http://buyersguide.macrumors.com/ note the 'don't buy' recommendations.
The same thing works for durable goods not just improving goods like PC's. Consider if you wait 1 month when buying a chair it's 1 month newer so you’re likely to wait an extra month before replacing it. Multiplied by 100 million a people and even just 1 month becomes significantly lower consumption.
'This' starts a vicious cycle where fewer durable goods are produced so make fewer goods and thus have less money which reduces consumption of durable goods and non-durable goods. Using the TP example if your broke you can slightly cut back on TP use.
Deflation makes employees more expensive even as demand slows. Even in some kind of ideal economy without downward nominal wage rigidity (which leads to people getting outright fired instead(, their wages get cut. But that can end up being almost as bad: almost everyone has mortgages, student loan debt, car notes, or credit card debt, and suddenly that debt is consuming more of their annual income, forcing them to cut back.
It's a problem with aggregate behavior and feedback loops. As long as you're zoomed in on the individual level, it doesn't make sense.
This is exactly what happened during the 2008 recession. Once triggered (in that case by the housing bubble, subprime mortgages, etc) it spreads through the economy and it's hard to break out of - we still haven't really done so. The Fed is still failing to meet the target inflation rate despite extraordinary monetary measures.
For example if prices were to start falling I'm going to start putting off the following purchases:
1. New computer
2. New TV
3. New stereo
4. Toilet paper
5. Food
6. Gasoline
7. Rent
8. A new-to-me used pickup truck
9. Clothing
10. Several dozen other things which I can't really wait for but which I will pretend I could for the sake of making a point
EDIT: Yes guys, I do realize that it's a marginal effect and that people aren't going to STOP buying TP. The point I'm trying to make, though, is that the "deflationary spiral" told as a story isn't entirely accurate either. People don't STOP buying things, they simply reduce their consumption ever-so-slightly and if EVERYONE does that, it cuts growth.
My point, though, is that there are a whole bunch of things which aren't really elastic or which already have falling prices but don't cause general malaise. Yes TV purchases do get put off for the next best model, but eventually people do buy TVs and the industry has models that work even given this reality.
In my personal opinion it's not that deflation itself is bad it's that it takes a long time for the deflation to work through the economy and for expectations to readjust. And given the maniacally long maturity of mortgages it takes half a lifetime to reset expectations and it's simply unrealistic.