Although deflation strikes fear in the minds of governments (the principal economic stabilizing mechanism, interest rate adjustment, is no longer viable) and bankers (“because a zero rate would roil money market funds, which rely on a positive interest rate to cover their own operating costs”) it is ordinary people who would lose out most.
Low interest rates on mortgages may have created a false euphoria where people believe they can afford house prices that would normally be out of their reach. Deflation could spell bad news for anyone with debt, such as a mortgage, as the value of the debt would increase over time. For the poor, who often rely on extortionate loans just to survive, let alone buy property, the effects could be crippling. In the early 19th century in Britain, social unrest brought on from the effects of deflation almost caused a revolution.