Fine. I'll bite. I'm a sucker for this kind of thing.

Depreciation of electronics is not equivalent to deflation. Electronics do not drop in price due to the increase of purchasing power that a buyer has, but due to improvements in manufacturing process, supply chain management, technological progress, and most of all competing technology which makes obsolescence the biggest factor in electronics depreciation. You can purchase a smart phone capable of all the world's computing power without wires because of incremental improvements, not because of deflation.

People continue to buy these products because they get what is called utility from them. I don't keep my old phone because I want the new one. I want the new one because it does new things, or does old things better. The enjoyment and use that I get from this phone is called utility. People are not willing to wait to buy electronics if the utility that they would get from the new product is worth less than the money they would save by holding on to the old one.

And people avoid electronics purchases due to improvements all the time. Example: "I broke my iPhone 5 screen. I could buy a new iPhone 5 screen and fix this one, or I could just wait for the 6 which comes out in a few months." They're not waiting due to price issues, or other factors. And they certainly aren't waiting due to deflationary pressure.

Savings can produce a virtuous cycle. The question is whether or not that is a good investment. In inflationary times, if your interest rate is 3%, but inflation is 2%, then in real terms (real means inflation adjusted) you are not getting 3% back, but 1%. If I buy a house, and my interest rate is 4%, and inflation is 2%, then in real terms I am only paying 2% interest. In times of inflation, it can be better to purchase capital investments with borrowed money rather than hold cash. This causes people to purchase homes and other large but critical purchases. Home ownership accounts for nearly all the wealth in the middle class. It is the single largest factor in wealth, not income. In deflationary times all of this is backwards because it is in the interest of the renter and not the owner.

You asked what I meant to make banks 'match' other investments. All investments, including savings, compete for investor dollars. If saving money in a mattress yields -2% due to inflation, the bank is a better bet even if it only offers 0% in real terms. If the stock market yields 5% then it can be a better investment. All investments compete with each other based on risk and reward. This is how the market decides how much an investor should receive.

Getting more for your money is not bad. Getting more for your money is unlikely. Deflation does not just happen in a vacuum. There are reasons why deflation occurs and they heavily relate to consumer confidence. Consumer spending makes up over 71% of our economy. If even a small portion of this base holds off spending, it can really hurt the prospect for jobs, real wage growth, and economic prosperity. This causes businesses to lay people off, reduces the amount of money in the economy and continues deflation. The virtuous cycle is never going to happen. This will be a downward spiral. The Great Depression was not a boom time despite deflation. The US is a huge economic power because of inflation. If inflation gets to high, it will do the same thing as deflation and wreck the whole system. There is a delicate balance.

The bank does not lose money in the housing deal by lending out money due to what is called amortization and interest. If a bank lends you 100,000 and you buy a house, the bank has to charge interest to make a profit. This profit will lose value due to inflation, but not in the same amount that the interest will accrue. They also head the inflation off at the pass by taking most of your mortgage payment and applying it not to the principal of the loan, but instead to the interest that the loan has accrued thus far. EVEN MORE SO, most banks that originate the loan sell off your mortgage immediately to someone for a guaranteed amount and stop worrying about the interest ever. I lend you 100,000. I sell the loan for 102,000. I've just made 2,000 risk free. The guy who I sold it to paid 102,000, but now has the rights to the interest accrued on the loan and takes the risk associate with originating a loan.

You will not see banks offering home loans for 4% in times of 5% interest for these reasons; you simply can't make money. If inflation is out of hand, which is as bad a thing as deflation and is supposed to be controlled by the Federal Reserve Bank, interest rates would sky rocket, lending would become unsustainable, and growth would slow. In fact, this is why the Fed adjusts interest rates in the first place. They have to slow the slowdown and speed up the little recoveries that happen ALL THE TIME as part of the natural business cycle.

Banks don't confiscate your house if you pay your bill.

Your income will not be higher in times of deflation. That's ludicrous. As salaries become untenable for businesses they will renegotiate old employment contracts, fire those who won't and re-hire people who will work for the new normal. There are cost of living increases made in nearly every business sector, these would become cost of living decreases.

Everything you have said shows a very basic understanding of the word deflation but not any real understanding of the systems which support it. Friedman, Feldstein, Bernancke, Hayek, Keynes, they all agree with me. No one agrees with you. We aren't psychopaths, we just actually understand the system better. These aren't games, and this isn't a debate, this is you being told that you don't adequately understand what you're talking about and someone taking the time of their day to stop you from spreading ignorance. You're welcome.