Deflation does not decrease the value of assets. The intrinsic value of assets does not decrease just the dollar value. Deflation does not decrease the value of a ton of steel or a bushel of corn it just reduces the price. There would be an interesting tax consequences of deflation. If I lend money at zero interest in a 2% deflationary environment, I am making a real (deflation adjusted) profit of 2% but would owe no taxes because I would show no dollar gain. In an inflationary environment, you have a savings account that pays 3% interest, but inflation is 3% you have a zero real (inflation adjusted) profit but you have a 3% dollar value gain you will owe taxes on. If your interest rate is less than the inflation rate you will lose value and still owe taxes.

TEK