Can someone debunk this?
Why is deflation generally good?
But wouldn't that devastate investment which grows the economy?
Sending money overseas.
@Neodoxy: Market forces contracting the money supply is better than the Fed printing money.
So then deflation isn't good, it's just better than inflation which is caused by the state?
The problem is people have implicity ingrained in their mind that government is the source of the economy. Everything centers around government. Let's think about this.
We should be concerned with the health of the private sector, the free market, not government. How does government grow the economy by taking more from those who use their capital to create jobs and grow the economy in the first place? It doesn't. It's simply redistributing that wealth. Now, technically, using the lousy GDP calculation, when the government confiscates more from one and gives it to another, the GDP remains the same. However, was that money actually used to increase productivity and grow the economy? In virtually all cases the answer is a resounding no. The government is a net drag on the economy past a certain point. The anarcho-caps will disagree, but I'm just arguing from the limited-government perspective, i.e. only fund defense, courts, police, and that's about it.
Even in the off chance the government takes more from one and uses it to actually increase productivity, there is still the administrative cost included in doing just that. Government has no business doing such things in the first place. Taxes should be reduced in all cases whatsoever - or at a minimum not raised.