>Aside: For those wondering why economists are so scared of deflation, it's because it destroys the rationale for people to save and invest.
Dude, you have that backwards!?
Deflation means your money goes UP over time. It means people are more likely to BURY their money than take risks on the stock market.
But the real reason that deflation is so scary is in fact the debt addiction that everyone has.
Effectively the entire economy is negatively geared. It is in a "grow or die" scenario. If you grow, you take away interest and have less growth. But if you shrink, you shrink by a LOT more than the growth loss and risk a death spiral. (e.g. capital flight etc)
Apart from that, you were making sense...