The argument that I hear the most is that if money will increase in value then people are going to save as much as they can and spend far less, which will decrease economic growth. But wouldn’t it be far better if everyone only buys the things they really need and save the rest?
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It’s not just people who would be holding onto their money; institutions like banks would be, too. They wouldn’t be loaning it out or making investments.
“The economy” is built out of money in motion, and deflation causes money to stop moving. So people aren’t buying as much, they aren’t borrowing as much, which means companies aren’t seeing money come in to pay their employees, aggregate demand will continue to collapse, and eventually the economy grinds to a halt and dies.
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