As somebody who has studied economics, can I just state that stable low inflation is the BEST course for any currency (whether virtual or fiat)?
but with my economics background, I am just echoing what major economists have communicated about the drawbacks of deflation.
I am reiterating economic theory.
You failed to mention that all of your economics teachers likely have memorized Keynes' books and worship his every word. Which is ironic because Keynes is no longer stating theories because he is dead, and thus there is no more supply of his theories and thus no inflation of further theories. So Keynes should be ignored by anyone who supports inflation.
Come back when you understand Hayek, Mises and Friedman.
I actually think that both Keynes and Friedman would have the view that deflation breeds recession and spiral. They just explained it in different ways. Here is support for Friedman:
http://en.wikipedia.org/wiki/Monetarism"Within mainstream economics, the rise of monetarism accelerated from Milton Friedman's 1956 restatement of the quantity theory of money. Friedman argued that the demand for money could be described as depending on a small number of economic variables. Thus, where the money supply expanded, people would not simply wish to hold the extra money in idle money balances; i.e., if they were in equilibrium before the increase, they were already holding money balances to suit their requirements, and thus after the increase they would have money balances surplus to their requirements. These excess money balances would therefore be spent and hence aggregate demand would rise. Similarly, if the money supply were reduced people would want to replenish their holdings of money by reducing their spending. In this, Friedman challenged a simplification attributed to Keynes suggesting that "money does not matter."[5] Thus the word 'monetarist' was coined...
It attributed deflationary spirals to the reverse effect of a failure of a central bank to support the money supply during a liquidity crunch."