Well it's working at the moment. Fiat is inflationary by design precisely to discourage hoarding money and to spur spending, which apparently promotes economic growth. The system is built around it after all. How long it will continue to work is anyone's guess though.

It's hard to imagine how a deflationary currency will work because it goes against the principle of world economy at the moment. There could be a "rich effect" though, where peoples' wealth start growing, and they, in turn, start spending more and more. This phenomenon was observed in Japan recently. Either way, deflation is the least of Bitcoin's worries right now.