This is a confusing topic because of the mixed definitions for both inflation and deflation. For now I'm just talking about a general fall in prices with a stable money supply. Lets say prices go down 3% and my wages drops 2%, I am better off but this isn't immediately apparent to me. How do you console people about inevitable wage cuts as prices fall? Or do they, in general, fall so quickly that no wage cuts are needed and wages stay stationary? Even if this were the case, never getting a raise feels bad, and getting a wage cut feels bad.
"It has been well said that, while we used to suffer from social evils, we now suffer from the remedies for them."
F.A. Hayek, The Constitution of Liberty
The best way to explain deflation to people is just to point out the facts as you did, "Lets say prices go down 3% and my wages drops 2%, I am better off."
If that doesn't work, I doubt you can console (pander) the person. A near hundred years of brainwashing and conditioning of the people that inflation is good and to be expected is difficult to overcome for the average person. Most people won't accept it even if presented with facts.
It's all moot though, because the country will simply never have any true, sustained deflation while Bernanke and the Fed exists. Period.
I don't think there is really much of a problem here, other than in the very short term. Business could also get creative in how it pays workers, buy increasing benefits (which would also be declining in price)
Just to note...if the supply of money is fixed, prices of goods and services only go down when their supplies expand.
Presumably, the supply of labor is relatively fixed (low population growth), so wages would not go down that much given a fixed money supply.
And when you include increases in marginal productivity due to captial investment, wages will actually go up while all other prices are falling.
At least he wasn't a Keynesian!