Good, bad and benign deflation
Bad deflation is caused by decreased related to a financial crisis. Lower demand due to demographic changes it is benign deflation. Good deflation is caused by reductions in the cost of goods.
Deflation
Deflation problems
There are five main arguments against deflation: it is bad for the economy, debtors, and companies, stops people spending, and makes it difficult for central banks to control the economy.
Deflation and the 1930s
History often portrays the problem of the 1930s as deflation. However deflation was just one of the outcomes of the financial crisis at that time and not the cause of it.
The Japanese deflation myth
Japan has not actually experienced much deflation in its "lost decades". An alternative explanation for the lower prices seen in Japan is related to the strengthening Yen.