Deflation is a greatly misunderstood phenomenon.
In fact, I am inclined to go so far as to suggest that only a handful of Australian actually know what it means. The basic problem is that many people associate deflation with a general fall in prices, which in turn they associate with depressions. The error of much of this thinking seems to be rooted in a misreading of nineteenth century price movements. Many have now noted that nineteenth century Britain experienced 50 years of falling prices, even though living standards rose at an unprecedented rate and level. From 1875 to 1895 wholesale prices fell by about 45 per cent while industrial output and real wages continued to rise.