[jfengel]

But you hate it when the things you sell get cheaper. That's the problem. Even if you're an ordinary employee rather than an owner, you get squeezed when the owner makes less money. Their debts remain fixed while their income decreases.

If that leads to your income being reduced (or you're downsized), you have less to spend and your contribution to demand goes down. That starts the process all over again with whatever you consume. The worst case is a "deflationary spiral" where that keeps going round and round.

It's widely thought that a small (2%) inflation avoids that spiral by encouraging people to spend their money today rather than sit on it. It slowly eats into fixed incomes, which isn't great, but in general it keeps the economy moving for those who are employed. Ideally it pumps the GDP faster than inflation, allowing us to compensate for those on fixed incomes.