"The economy" is a fiction, really. There is only people. Every scenario that we can imagine is going to favor those who could have predicted it, and profited from it, in the short term. Gentle deflation favors the consumer & saver in the long term, while gentle inflation favors the debtor. Catastrophic inflations favors no one, in the long run. It would be safe to assume that is also true with catastrophic deflation, but there isn't much evidence that catastrophic deflation is a realistic possibility.
The economy is whatever we define as such. Any inflation favors the debtor and any deflation favors the creditor, but if it's known, is usually factored in the interest rate.
You mean catastrophic deflation is not possible within the bitcoin economy once it has an stable user base?
Having said that, your statement that deflation hurst investors and entrepreneurs is faulty. It may be true, or it may not be true.
It hurts entrepreneurs because they don't get financing.
It hurts investors because their investments (so called real capital) don't yield as expected.
The entrepreneurs who couldn't get financing were likely not a good bet. The investors who lost profits because of deflation were betting on inflation. No harm was done to the economy at large in either case, since the last thing an economy needs is more bad investments and failed entreprenuers.
I don't think it is fair to say that all entrepreneurs that don't get financed don't deserve it. With deflation less enterprises are profitable. And some of them that are not financed could have been without deflation.
That's my point, but maybe you disagree.
