> More than precious bitcoin?
I’m advocating for stable currency. Not bitcoin.
> you agree this will lead to reduced prosperity
I agree that it will reduce the velocity of money and maybe “GDP”. But not prosperity, individuals being able to save wealth into the future is a better life outcome than more goods changing hands.
> and a precious asset is an inefficient medium for commerce
You are conflating liquidity with deflation. To be a currency it has to be liquid, we agree. We also agree btc is not as liquid as cash. But deflation or stability is orthogonal from liquidity.
> now you also have hodling, zero economic activity,
Already addressed. People want money to buy goods.
> my dollars don’t disappear.
The value isn’t lost in the exchange but it’s lost everyday due to inflation.
And by “lost” I mean transferred to government projects.
> that money effectively does disappear from the economy.
No it merely is saved for a future consumption date. If we average consumption needs of participants in the economy there is no reason to expect a monotonic hoarding effect. That would mean consumers are not satisfying their desires for goods.
Here is one last framing. The economy is not money, it’s goods and services. Money is just a tool for claiming them. So what does an inflationary currency do to help the economy? Does it cause more people to get out of bed and create new goods and services? No. It just transfers claims to resources to someone else.