Wouldn't they just wait until the price of something matches what they deem is fair value? And if it never goes down to a fair value, then they wouldn't buy it (that might include things like cryptocurrencies, huge TVs, Pets.com stock, and lots of nice-to-haves that waste a lot of resources but props up that vanity GDP metric and "boosts" the economy)
When FunBux are deflating, people who have FunBux (or are owed FunBux) tend to avoid spending if when they can, because its predicted future value is greater. In essence, it gradually stops behaving like a currency and is more like a commodity that they are holding for speculative purposes.
So how would that support your theory?
Perhaps you've somehow gotten the idea that deflation means a currency is absolutely not spent in any amount under any circumstances, because the incentive is so strong that it overrides all other things that human may need or want? Because that's not at all what I said.
People who can "afford" not to decrease their cache of DeflationBux will tend to avoid doing so, unless they're getting something they believe has a better future value. They are more likely to delay non-critical purchases or arrange deals that avoid that currency.
And when that happens, the currency isn't really doing its job. You can have plenty of blood in your body, but it's a bad thing when a lot of it stops moving.
You say it isnt doing "its job"? but thats not a real reason. cigarettes arent doing its job if its stashed away and not smoked.
In your example, the problem is that it is harder to take a bitcoin-denominated loan to purchase a house because your bitcoin-denominated wages go down every year and eventually you can't pay off the interest anymore.
Continuing the example of buying homes... wouldn't that be a good (or neutral) thing since it means we wouldn't have so many people speculating on real estate, and taking out easy loans to buy homes, leading to unhealthy increases in home prices?
I agree that the housing market is not the ideal example but we need to look at debt in general when talking about deflation. In a deflationary setting, reduced lending reduces the speed that money moves around and depresses the economy. Business have trouble closing the book because falling prices of goods sold today are not enough to cover the cost of supplies from when they were manufactured a month ago. Periods of deflation have tended to go hand in hand with major economic busts, which is why modern monetary policy tries to avoid even the mildest form of deflation.
The problem with deflation is that it prevents the thing from doing it's job as a currency. People have an incentive not to conduct transactions with it. And insofar as that prevents people from making transactions, that harms the economy.