The last impact of the deflation is from the supply side is that the prices as well as the wages most of times fall and it is quite obvious that in the economy it is quite hard to lower the nominal wages. This leads to downward nominal wage rigidity (Adrian, 2010). This means that unless the economy does not have a mass unemployment it cannot manage to have falling wages. This means that the workers are so desperate in this case that they are even willing to accept the declining wages.
It might be observed from the above arguments that none of these arguments could be true when the rate of inflation goes from +0.1% to -0.1%. Even with the positive or low rate of inflation, the zero lower bound might be binding; the rate of inflation is lower than the borrower expect leaves the borrowers with a burden of debt which is worse as compared to the debt which they already had (Eichengreen, 1985). This is true even if the rate of inflation is positive and some nominal wages would have to fall even if the overall inflation rate is a bit above zero as relative wages are shifting around all the time. Hence, the argument which says that deflation is a bad thing stating that some problems of the economy get worse as the rate of inflation falls. Moreover, too low rate of inflation might lead to very critical impacts on the economy. Thus it is a bad news that inflation even being positive is below the target of the Federal government of USA. Hence, it is suggested by respected personalities like Olivier Blanchard that inflation must be set at a higher target like 4%.