There is initially no inflation and no deflation. I'm still waiting, explain to me how deflation will mirror inflation when they set in.
The only cases you can consider are constant, permanent, and expected inflation, or constant, permanent and expected deflation of course.
So you don't what to deal with the simplest case and hope that if you complicate matters (making them hard to understand), it will somehow help you? Okay, there is 5% deflation (and 5% inflation) already under the way. Nominal interest rate (at which you borrow) is 0% under deflation (it can't be less than 0 by definition), and 5% under inflation. The question remains the same, i.e. if you borrow 1000$ and your profit margin is 2%, when will you be profitable, and when will you suffer losses?