I'm not sure you realize how leaky the abstraction of "deflation" is, or for that matter all of the abstractions thrown about in the laughably oversimplified version of economics that has made it into the lexicon of pundits and bureaucrats.

The IT hardware industry has been deflating for, what, half a century now (Moore's law).? Yet nothing bad happened.

This has nothing to do with inflation or deflation, which are very specific concepts.

That is inflation. Transistors have gotten less valuable.

It is transistor-inflation, where we print up tons of transistors. It is the opposite of currency-inflation, where we print up tons of currency, driving prices UP.