Let me try understand this.

Say you owe the bank roughly a million dollars and the house is only worth half a million. If you continue to pay the bank, you are paying double price for your house, plus interest.

Material cost or anything spent never change? We can't regret buying expensive computers in past? Everything, even if loan. Loan only default on bankruptcy, "no property ownership ban"? Do people want that?

There no investment, no economic growth, no liquidity.

Incentive of "profit" system. Until it backfires with overloaded money. Active income generate economy of production + money. Passive income skip production, overloaded money, inflation. Without profit system, big projects can only funded by slower tax/donations. But no one creating extra profit/inflation.

So you now get my point? Deflation happens because of good automation (slaving machine). Stopping passive income investment stops inflation. While waiting new automation, things get lesser labour and no inflation to demand additional income.

Where's the loophole in my opinion?