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Deflation will probably cause the value of the dollar to go up.
In an inflationary environment, because assets are going up in value, debt is good.
In a deflationary environment, debt will kill you as assets are worth less.
Depending on the scenario, taking out debt now to buy a non-productive asset (i.e. a house) is a great idea, or a terrible idea.
The folks at Minyanville yesterday touched on this (hint: they are looking for deflation, so they would say to save your pennies):
http://www.minyanville.com/articles/index/a/15238
