Deflation doesn't remove all incentive to invest, but it does destroy the "gotta keep ahead of inflation" one. I meant to be more explicit about that when I said, "you could still try to invest some of it to try to outperform the gain you get from deflation."
To paraphrase jwz (like that's never been done before), "When the rebuttal to your argument is 'The Industrial Revolution', generally that means that you've lost the argument."
Ahh, but they only invest in new enterprises that they feel are likely to significantly out-perform the prevailing real interest rate (risk free rate of return).
Significant deflation raises the bar, by putting a floor under the risk free rate of return.
