Most economists, not all economists. And most of those economists are the ones destroying economies, in my opinion.
If you're interested in reading a counter-viewpoint on why deflation is actually good – it's the policies aimed at countering it that are really what's bad – here you go: https://mises.org/blog/deflation-always-good-economy
That article is pretty bad. Even at this point in the article it is clear he does not understand why a small amount of inflation is good. For example he says:
"According to popular thinking, in response to a high rate of inflation, consumers will speed up their expenditure on goods at present, which should boost economic growth.
So why then is a rate of inflation of 10% or higher regarded by experts as a bad thing?"
According to this line of thinking if a little bit of something is good, then more of it should be good, right? I think we can all see the faultiness in this logic. What he doesn't get is after inflation reaches a certain point, people start expecting their money to be not worth as much in the very short term, leading to increase in buying, leading to higher inflation, and so on. This spiral is how economies like Zimbabwe end up with crazy inflation. However at a low rate, around 2% and a little higher, people do not immediately expect their money to be worth less in the short term, and therefore the economy does not enter this spiral.
The rest of the article goes into some decently complex economics. Suffice to say his core argument - that inflation hurts wealth creators because it decreases the value of said wealth- does not hold water unless said wealth creators are putting all their money in places with interest rates less than inflation. This means no investment in their or a business, but just parking the money in a bank. Anybody with that kind of money will know to put large amounts of money in inflation-protecting assets. Because risk of an investment is generally the amount of interest you get above and beyond inflation, parking money in assets growing at the rate of inflation is generally very safe.
That article is just bad. It spends a lot of time talking about reduction in prices, but the real problem with currency deflation is that it results in a reduction in wages.
If computers cost half as much as they did ten years ago meanwhile everyone is making the same amount of money, that's great. But if people are also making half as much money then it's useless, or worse than useless because then people are making less money but still have the same mortgage they took out ten years ago. Which is what happens with currency-generated deflation (as opposed to efficiency-generated consumer price deflation).
> The economic effect of money that was created out of thin air is exactly the same as that of counterfeit money — it impoverishes wealth generators.
Except that the created money can go to the government which it can spend in lieu of collecting more taxes, which would otherwise have come from "wealth generators" regardless.
It's not about the stuff that just cancels out, it's about everything that doesn't.
Money you already owe becomes more expensive to pay back.
It turns the currency into an investment vehicle that competes with economically productive activity for investment. If cash in a mattress predictably appreciates by 4% a year then nobody will be willing to invest in anything that produces less than that in real returns, so all of that productive activity disappears out of the economy to be replaced by currency speculation. Or is forced to pay the higher returns to investors by paying lower wages to employees or charging higher prices to customers, and is able to because less available investment means less competition when your would-be competitors don't get funded.
When most of the currency is held by speculators it causes high volatility in the currency value, which interferes with normal businesses using it as a currency because the value can fluctuate wildly even for those who only hold the currency temporarily. Which leads to economic inefficiency and less competition again.
Everything about it causes unearned wealth to go to people who uselessly hoard currency at the expense of everyone else.
Widespread deflation would drive the economy to a halt because it would be crazy to take out large loans (imagine paying down your mortgage without ever getting any equity) and it would discourage business investment in favor of the safer option of just sitting on huge piles of cash. Even your Mises institute guy seems to want zero inflation more than rapid deflation.
"According to popular thinking, in response to a high rate of inflation, consumers will speed up their expenditure on goods at present, which should boost economic growth.
So why then is a rate of inflation of 10% or higher regarded by experts as a bad thing?"
According to this line of thinking if a little bit of something is good, then more of it should be good, right? I think we can all see the faultiness in this logic. What he doesn't get is after inflation reaches a certain point, people start expecting their money to be not worth as much in the very short term, leading to increase in buying, leading to higher inflation, and so on. This spiral is how economies like Zimbabwe end up with crazy inflation. However at a low rate, around 2% and a little higher, people do not immediately expect their money to be worth less in the short term, and therefore the economy does not enter this spiral.
The rest of the article goes into some decently complex economics. Suffice to say his core argument - that inflation hurts wealth creators because it decreases the value of said wealth- does not hold water unless said wealth creators are putting all their money in places with interest rates less than inflation. This means no investment in their or a business, but just parking the money in a bank. Anybody with that kind of money will know to put large amounts of money in inflation-protecting assets. Because risk of an investment is generally the amount of interest you get above and beyond inflation, parking money in assets growing at the rate of inflation is generally very safe.