I don't think most people know what they're talking about regarding inflaton/deflation. You don't actually need inflation at all. What's exactly is wrong with falling prices?
Inflation encourages savers to invest their money rather than just stuffing it under a mattress; they need to get an interest rate of at least the inflation rate, or else the value of their savings will erode. Investment is claimed to be good for the economy. It means people getting paid to do stuff, rather than there being no jobs and no production or consumption.
Governments can manipulate the economy to some extent by adjusting interest rates, and making it easier or harder for people to borrow. There's a limit to how low interest rates can go because they can't be negative, but increasing inflation by 1% has a similar effect to decreasing interest rates by the same amount, and so a steady rate of inflation of around 2-3% gives them a bit more flexibility.
Obviously not everyone agrees with the above, especially in Bitcoin circles, but I believe it's the mainstream economics view.
