> negative inflation (deflation) is really really bad, because in that situation, the economy grinds to a halt because nobody wants to spend money (because it'll be worth more tomorrow),
This is a fallacy, because most people need to spend most of their income on immediate needs (food, mortgage/rent, utilities, car payments, gasoline, etc.). Therefore the economy will still function. For the people who have surplus income to invest, they already calculate a "real rate of return" by subtracting inflation from the nominal rate of return (i.e. measured in inflating currency). Thus if your stocks went up 2%, but inflation was also 2%, your real return is zero, because you can only buy the same amount of goods and services as the original investment could. If inflation was -2% (deflation) instead of +2%, it doesn't affect the method to calculate of real return, only the value you subtract. The market values of various investments would adjust to yield the same real return they do now. This is no different than what happened in past times when the inflation rate changed from one value to another.
This discussion applies to *mild* deflation, on the order of a few percent per year. Rapid deflation and rapid inflation are both bad. We have an example of the first in India, where they are trying to suddenly withdraw large bills from circulation, disrupting the normal flow of funds. We have an example of the second in Venezuela, which is now probably classed as hyperinflation (>100%/year)