20130927: inflation vs deflation

I am a very simple fellow with a very simple mind and thinking. I don't know much about economics, global economics and macro economics.

To my very simplistic understanding, inflation is because of 2 things

1. Visible inflation: increasing prices of almost everything constantly. In India, the published inflation is ~ 7%. It is usually because of supply and demand imbalance. (Growing demand for everything and lesser supply of things).

2. Invisible inflation: as the name suggests, we can't easily perceive it. I generally think it is around 4-5% in India. It is caused not because of increasing prices but because of reducing value of the money we have. It is usually called reduction in purchasing power. It is caused by infusion of new money in the economy because of the need for it by banks, by governments etc. If there is more money available then it goes without saying that the value of the money you are holding goes down.

Put together I think the real inflation in India is around 10-11% per year.

Globally, inflation is considered good in a manageable range. In India I think it is ~ 4% per year. Doomed are the countries who are starting at deflation. That's the generally accepted norm.

But why?

I understand inflation caused by rising prices because of demand and supply imbalance. It is temporary till supply catches up.

However, why do we make more money and decrease the value of existing money?

Theoretically, if we don't make more money, there will be more demand for money. Naturally, people can't pay for things and prices should fall. And since the value of money we hold goes up , we can afford more things.

Yes, on paper it is a deflating economy but in reality it should be a healthy economy?

Arguably, it will increase the gap bw haves and have nots. But the current world is not doing different either isn't it?

What am I missing? If you understand it, can you please let me know 🙏🏼