Parapundit has this post which links this article from the Financial Times discussing the use of inflation as a tool to aid the Japanese economy.

The FT argues:

The banks' problem mirrors the economy's problem: companies cannot make a profit. When companies run losses, they cannot pay their debts. These bad debts pile up on banks' books. Banks eliminate bad debts year after year, but companies have been defaulting even faster, leaving the country's financial institutions with more bad debts than before.

This makes the (erroneous) assumption that the Japanese corporate economy is fundamentally sound save the effects of currency deflation.   However, most commentators (for ex., here) have argued that the root causes are actually:

• overcapacity in several industry sectors --> stemming from overly generous investment capital over several decades
• white collar and domestic market inefficiency --> stemming from cronyism and direct/indirect government subsidization
• illiquid capital --> stemming from overly incestuous relationships between firms and Capital gatekeepers (predominantly banks but also various equity holders like pension funds)

The combined effect of these factors is a proliferation of Zombie Firms that suck up capital, IQ, and real estate from firms that may actually put them to good use.   In other words, making the current portfolio of firms profitable in nominal terms via inflation simply masks underlying problems with the firms themselves. 

In this light, a deflationary monetary policy is actually a Good Thing because it forces firm failure and realignment at an accelerated pace -- taking the bad medicine all at once rather than spaced out over a decade.