Degrowth

Its possible, theoretically. We've seen deflation before historically, but it makes businesses lose their minds.

How dare the value of a dollar go up!

I'm pretty sure the destruction of value is inconsequential in a capitalist model until you destroy means of production. In fact, I'm pretty sure destroying things would be beneficial to capitalism, because then it would be able to produce useful things again rather than trying to invent new useless shit all the time.

Is it compatible with degrowth though? Well, I'm pretty sure we are already living it. The growth is mostly virtual imo, but the actual riches is decreasing for most people in the west. The growth benefit is going more and more to the privileged, and the poor get their public services slowly decaying because the growth doesn't go into it.

Which is why I hate this concept of degrowth. Growth as a concept only serve one purpose : it's an illusion so people can believe capitalism will benefit everyone. But the core problem of capitalism is the asymmetry of power between the capitalists and the workers. And degrowth does nothing against this asymmetry, so a de growing world would only make the life of workers even worse.

Degrowth is perfectly possible IMO withing capitalism. Wars and crisis are mostly about that.

Finally, the biggest problem for ecology is not actually capitalism, it's consumerism. Consumerism is a consequence of capitalism, but not a necessity of it. What you usually want to solve with degrowth is consumerism.