The difference between competitive production costs within your country, or your products becoming overpriced abroad is perhaps not about nominal inflation or deflation, but how people react to it.
You sell your product for X amount of BTC, then exchange rate has doubled. Is there any reaction that efficiently stops deflation in that case?
Who has pricing power, will workers go on strike and demand more increase than current inflation, or will they just do nothing about it.
What I'm trying to tell you, is that with deflation you will loose the market due to high prices and your workers will go home. What they can do with deflation? Make a strike to lower their salaries or what?
In deflationary spiral, the country could also buy products and labour for cheap from countries that have printed too much fiat. In the end, nothing will be permanently overpriced due to deflation.
It is so funny to see many people here seriously thinking that inflation is only about money printing
So this is how you think the perfect crypto economy should work? You are having a deflating currency and you can just sit tight, scratch your balls and order all goods and services from abroad for BTC profits.