So the short answer is actually two-fold: government spending as a percent of total GDP is low and household debt has been declining, which is deflationary.
Household debt declined by writeoffs not by repayments, hence money supply was destroyed correct?
Interestingly, it doesn't matter whether by write offs or repayments. Either case is deflationary. This is due to the fact that money is created when credit/debt is created. When the debt is paid off, or the credit repaid, the money is then destroyed. The same occurs in write off.
The sad part about write offs is who ends up with the real property. It usually ends up in the hands of the bank. That's the same people who loaned out nothing and called it money, in exchange for a claim on real property.
On the flip side of that is what happens when the market discovers that something has been produced that is completely unneeded. Sometimes these real things get destroyed. As an example, during late 2009, many new homes in California were literally bulldozed under. That's inflationary. However such a small amount of that happened compared to other occurrences that has little to no effect.