If everyone changed their prices, and their salary all at once you did nothing at all. You just changed a number - you didn't increase the money supply at all.

i.e. the total amount of purchasing power didn't change.

Exactly- So the claim that deflation (i.e. decreasing prices) will hurt liquidity is false.

How did you manage to get that from what I wrote?

Of course deflation hurts liquidity - if you have less money, there is less floating around for people to use.

Less money in denomination, but the total purchasing power isn't less.