John Cochrane argues in the Wall Street Journal that deflation fears are overblown. His main points are:

• According to the Friedman rule, low deflation is beneficial.
• Sticky wages only cause problems if the deflation rate exceeds the rate of productivity growth. This is not in the cards.
• Similarly, the debt burden does not rise dramatically when prices fall by only two percent per annum say.
• Low deflation limits the flexibility of monetary policy but that’s ok.
• Implosive deflation spirals of the type feared by commentators have never been observed. They cannot happen because investors who hold government bonds would sell the securities (fearing default) and try to buy goods instead.