Because they live paycheck to paycheck, with perhaps a finite safety net on which to make their debt payments. The need of people to be productive is another topic, which doesn't necessarily need to be (and sometimes isn't even) fulfilled by full time day job.
> They [recessions] force people into bankruptcy and reduce total wealth, now and in the future
Yes, which is why I'd like to stop the inflationary bubble policy. Remember the dot com bust? And then 2004? Our current problems stem from patching those up by permanently lowering interest rates. Further lowering them now will just cause another bubble that will burst in several years.
> Almost everyone suffers in a recession, not just the people who caused it.
Yes, but as we're talking about monetary policy, we're talking about the people who caused it.
> That would be a reduction in wealth, as people would be forced to make economic decisions they otherwise wouldn't.
Well if you've got a problem with the "forcing", then how about just government subsidies of 5x salary to those who work 16 hours a day? Flooding the market with cheap money is the same kind of manipulation which causes people to make economic decisions they otherwise wouldn't.
> This is just conspiracy theory nonsense.
I'm not saying they meet up an plan this, or even do it consciously, but there most certainly is a parasitic economy that receives all of the newly introduced money first, and therefore gets its benefits before the effects of the inflation are felt. Furthermore, the wealthy are able to hire "asset managers" to help them avoid the inflation, while the little guys have their savings eroded.
> I'm advocating a stable price level ... However, if we are forced to choose one or the other, it is better to choose inflation.
And if you haven't noticed, prices aren't anywhere near stable, but are generally on the rise. One can't claim to be for "stable prices" but also be against any possible drop. There will always be fluctuations, so suppressing any downwards movement will always produce a net upwards trend, not stability.
But the main problem is that technology disagrees. To maintain a stable price index while technologically influenced goods are dropping requires everything else to go up. When efficiency is increasing, why should prices be stable?