First, the claim about wealth transfers isn’t true unless capitalists and entrepreneurs fail to anticipate the changes in money’s PP, If they correctly anticipate higher prices in the future, they bid more heavily for factors of production today and factor prices rise today keeping rates of return the same, i.e., interest rates are unaffected. If they correctly anticipate lower prices in the future, they bid less heavily for factors of production today and factor prices fall today keeping rates of return the same, i.e., interest rates are unaffected.
Second, price deflation in today’s world would cause widespread default on debt obligations. However, this has little effect on production. After the defaults, capitalists would still find it better to fund superior entrepreneurs and not inferior ones. If superior entrepreneurs are currently in charge, then they would likely remain. For example, if Apple defaulted on its debt because of its increasing burden during price deflation and capitalists thought Tim Cook was still the best person to run Apple, why wouldn’t they just renegotiate a partial default and continue with production they anticipate will be profitable in the future? Why wouldn’t banks simply renegotiate mortgages to relieve part of the debt homeowners who are likely to continue paying back on new terms? The point is that asset values need a one time reduction to come in line with the new anticipated deflationary future. The best way to deal with this is to take the loss and move on.