Well, deflation "is" bad. But that is only when it's caused from the natural demand destruction from the business cycle. Deflation from risk liquidation or from deflating bubbles is not the same thing. In my opinion, that is a good thing. After suffering through the bubble and the recession, all the middle class has to look forward to is the deflation, this is their ONLY chance at recovery as it allows them to buy assets on the cheap and the FED has ROBBED them of this opportunity. Instead this privilege is given only to the rich. As John Pierpont "J. P." Morgan famously said, when there is blood on the street, you buy. Well, that blood usually belongs to the poor and middle class.
However, natural deflation is bad. It's like a black hole. You can get near it, but you don't want to get sucked in because once you do, you can't escape. However, since the advent of credit in this country, I don't think we have seen "real" deflation the way exists in other cultures. We are just too greedy and consume too much to ever stop buying. In order to have real deflation you have to be capable of having a positive savings rate. Ours has been negative for decades although during the credit crisis it actually broke the zero line for the first time in God knows how long. Compare that to Japan where the historical savings rate has been steady at 15%. THIS is why you are seeing REAL deflation in Japan and not here.
