A few times I've read that governments crap their pants at the thought of deflation because their revenues get smashed as well as major impact on "real interest rates" which in turn impacts on investment. In 1932 the nominal interest rate was 2.73% but the real rate was 15.92%, due to deflation. From Wiki ... "Economists generally believe that deflation is a problem in a modern economy because it increases the real value of debt, and may aggravate recessions and lead to a deflationary spiral" Governments seem to favour a small positive inflation rate.
