One Salient Oversight argues:
[S]ince money’s worth is only as a means to exchange goods and services, then it functions as a way to determine the worth of something. When an economy is beset by inflation or deflation, then the economy’s ability to determine the worth of goods and services is compromised.
My argument is that, by ensuring that the value of money remains neutral – neither inflating in price nor deflating in price – then the economy is best able to use money to its full advantage.
Having lived in South America in the 70s and 80s, I know first-hand that hyperinflation makes planning difficult and is bad for the economy. But what about small amounts of inflation or deflation? Are we truly better off with zero real growth in the money supply? Might not some small amount of money illusion produce a motivating factor (and if so, how much is too much)? Is there some other reason why this might not be true?
I really don’t know the answer to these questions. Have at it.