My read on persistent deflation, for what it's worth (I'm not sure of my understanding):

If you trade your work for items of real value, you can use, trade, or save them. But when you have to take a lot of perishable coupons, dubious scrip, or inflated currency in trade instead, the motivation to save isn't there. You want to pass it on, get some value for it. If there's a risk it will turn into a pumpkin, you'd as soon it did so in someone else's hands. Ideally, you'd use it to pay taxes (redeem it from the issuer, in effect) but usually that's not an option so you have to pass it on to someone else. Because you're trying to get rid of this hot potato by trading it for goods of real value, you'll offer it for less than face value. That's how "bad money drives out good." You hoard the precious stuff and pass around the scrip. I guess that's how inflated currency encourages trade and investment.

This system works only as long as people believe they can trade their scrip for at least something of value.

When (paragraph 6, above) the gap between real and face value becomes quite incredible or buying power starts shifting faster than we can adapt, many people stop using the currency for trade. Or they will only accept it at really deep discounts, when they expect to get something of real value (e.g. a distressed business or its assets) in the bargain. The currency ceases to flow, so few people have money with which to buy or sell. In a buyer's market, prices fall (from sellers offering the "deep discounts" I mentioned.)

This behaviour is much the same at multinational corporations or corner coffee shops. Trade dwindles. Neither customers nor staff have income any more. So their suppliers and employees lose income, and so on...

Nice image, the governments pumping money into inflating a burst tire as fast as they can.

Now, if farmers or loggers or traders are putting in valuable goods from somewhere else into the system, then we can go on trading (perhaps not as much as before) as long as some of us still use currency to buy stuff of value somewhere. (This is what I meant in paragraph 5.)

As long as the farmers and fishermen believe they can still spend their money and make a living, they will thus keep the economy going, allowing nurses and teachers and bureaucrats to stay at their jobs. Prices can rise a lot, of course. The farmers need to cover their fuel and clothes expenses, for instance, so they have to ask a lot more money for their produce, so their customers need more money to buy it. That's inflation from "lots-of-money-not-enough-goods."

But, when even the farmers can't buy with the money, because middlemen aren't paying them enough to live on or the currency is so worthless it won't buy what they need, prices go down but trade still doesn't pick up. There aren't enough goods of real value on offer to support trade. People wait, save, or hoard against future needs. That's deflation from "no-money-good-enough-to-buy-goods."

Please, can someone tell me if I got it right?