Deflation in bitcoin society starts when mining difficulty starts to be too high for profitable mining to average miner. It has already started!
No.
What causes price deflation in bitcoin is the increasing demand. That demand is based on business acceptance (and expectations of future acceptance).
Mining is driven by demand and not the other way around. Well, difficulty increases security and that increases business acceptance, but deflation won't stop mining.
Dollar-based economy is growing (between crisises) inflationarily, because people around a world DO mine gold-equvivalent in NEW goods, services, technologies, etc., in rate at least constant (but actually exponential). For this new THINGS, US goverment DO print new 'paper' dollars.
In bitcoin, mining difficulty DOES exponentially DEPRESS the profit for sell/buy NEW goods, services, technologies, etc., for BTC.
Just keep, accumulate bitcoins & play on BTC exchanges - it simply MORE profitable than ANY business that uses bitcoin as currency, including even mining itself.
Why don't you all guys understand it?
It is true that price deflation encourages hoarding. But that's why merchants will have to accept other currencies to keep on selling.
That currency competition will decrease the value of bitcoin as a medium of exchange, decreasing demand, decreasing deflation.
Since bitcoin is not the only currency on earth, deflation can't kill it.