I don't understand why you call it worse, or even bad at all.

your money buys more tomorrow than today

This is evidently good.

you hold off spending it

Also good. Save money for retirement and emergencies.

Done en masse, that causes demand to drop

Less consumerism. Good again.

companies have to lower prices further

Still good. More acquisitive power for consumers, less money for CEOs, stockholders, and similar parasites.

More incentive to increase production efficiency and reduce waste, while proper regulations and actually punitive fines and civil and criminal responsibility for executives, board members, and stockholders keep salaries and quality up.

The concept of infinite growth has been raping and murdering the world for way too long. This looks like it would put a hard stop to it.

which means more deflation

So far so good?

It's a self-perpetuating cycle

Sounds great, to be honest!

(Though, to be fair, prices would only keep lowering until goods are sold for what they actually cost to produce, including salaries and whatnot, with occasional drops due to increased efficiencies; the system would thus stabilise at an actually reasonable level, as opposed to the current ultraconsumerist madness.)