Perhaps there is no real disagreement. What we have here are four concepts masquerading as two. Let's start with inflation, a rise in prices, and deflation, a f

Perhaps there is no real disagreement. What we have here are four concepts masquerading as two. Let's start with inflation, a rise in prices, and deflation, a fall in prices, and introduce the two missing words: expansion, an increase in the money supply, and contraction, a decrease in the money supply. Now, expansion causes inflation, and contraction causes deflation. Both have harmful effects. But inflation doesn't imply expansion, and deflation doesn't imply contraction. By themselves, inflation and deflation aren't necessarily bad. With a fixed currency supply, there is neither expansion nor contraction, by definition. Thus, in this case inflation and deflation simply reflect changes in supply, demand, or both. In particular, a rise in the demand for money increases its price (i.e., purchasing power) relative to other goods, which causes lower prices. If you think lower prices are necessarily a problem, I have a $50,000 computer to sell you. :-)