You seem to have got this exactly backwards. Remember that money itself isn't intrinsicly worth anything, it's just a way of allocating resources. So someone that stuffs $1 million under the mattress for future use actually benefits the ecomomy far less than someone that goes $1 million into debt in order to start up a new business.
The problem with imposing such value judgements is that you inevitably wind up supporting the Broken Window fallacy. Moreover, its probably easily proved false without resorting to that. Simply put, that millionaire got that money in his mattress from offering some type of product / service that was *successful*. Obviously the market wanted / needed his service....whereas your potential entrepreneur who goes into debt, its pure speculation as to whether he will offer the market anything that it wants / needs.
So to say its "better" for the economy to have someone borrow $1M to build the biggest ball of string vs to have someone who successfully is running an ongoing business is just plain wrong.
OK, this is where things get nasty. You talk about productivity gains, but so far they've mostly happened through decreases in the amount of labour required to manufacture items; the raw materials and capital costs have remained substantial and often even increased. This means that wages have generally decreased far faster than the costs of items have - this is a problem even without deflation. So an increasing amount of the cost of goods and services is going to a handful of very wealthy individuals that control the resources required to produce them. While we might end up with ridiculous amounts of abundance, the vast majority of the population isn't going to see it. What's more, the gains don't happen evenly: the cost of producing shiny technological items has decreased massively, but the cost of essentials like food and homes hasn't.
The other catch is that not all sectors of the economy benefit equally from this increase in productivity: in particular, for the most part service sector jobs haven't changed very much at all.
I would posit that deflationary environments favor more wealth decentralization. Consider two points:
1. The person that spends $1M to buy a widget factory that is producing widgets he can sell for $100 each. In 10 years, the deflationary pressures push down the price of his widget to $10 each.....Now he is ready to sell his factory and lets assume all things being equal he can only fetch $100K for it now. Suddenly its within the grasp of someone how had saved $100K a decade earlier, but was "too small of a fish" back then to compete -- now that person has a chance to buy this resource. Savers are rewarded.
2. Alternatively, someone spends $1M to buy a widget factors that is producing widgets for $100. Thanks to inflation, in 10 years the widgets are selling for $1000 each. He is ready to sell now and prices the factory at $10M. Without considering considering all the debt-finance scenarios, his potential buyers are now from an even more rarified wealth stratum. Namely, those that were a level "above" the factory owner a decade earlier.
And if you look at the real world today, you see consolidation happens exactly like scenario #2. A business that is sold for $10M this decade is sold for $100M the next, and a $1B the next. Eventually ownership moves from local investors, to regional investment fund, to finally one of the major investment banks (JPM, Goldman, etc) that are directly connected to the money printing machine.