[Sevii]

Deflation is supposedly bad because it encourages people to hold their money instead of investing it into businesses and new products.

The problem is that it is a prisoner's dilemma situation, where capital holders do not want to be 'encouraged' to invest their money even if it might be a net benefit to society as a whole.

[vzcx]

I am not convinced of the deflationary spiral.

No one invests for a "net benefit to society as a whole." They invest for a return, and you can NPV your project in both inflationary and deflationary environments.