It will encourage tipping (giving it away in large numbers), not real trading. As mentioned elsewhere, why sell goods for it if the value will keep dropping?
Probably even closer when you consider that cryptocoins suffer much more "loss" than USD does. People lose wallets, get hard drives wiped, etc., which are deflationary events that partly counter any built-in monetary inflation. Whereas losses of USD due to things like setting bills on fire or losing them in a lake amount to a miniscule portion of total USD outstanding.
Imo it's even plausible that Dogecoin's current loss rate is >5%, in which case the currency would still be deflationary even with the new coins being added.
When banks sit on money and refuse to make loans, or people stuff dollars under the mattress, that has a short-term deflationary effect, for as long as the money is locked up.
We have been lucky to have low inflation for the last several years. My mom was trying to establish her adult life during the double digit inflation of the late 70s early 80s and talks about how hard it was and how high the interest rates were.
Bitcoin went from 10.7M to 12.3M in the last year. That's 15%. But of course it deflated quite a lot in that time due to rising demand.
Doge will add 5% to the total supply in the first year, but that will be less every year -- it's a fixed number, not a fixed percent, assuming the title of the your OP is correct. (Not sure about this.)
Of course, that doesn't account for lost coins. Given how doge is used, I am sure a lot of the new coins will actually be replacing lost coins.
Why would you buy any goods if the value ouf your "currency" keeps going up? BTC is DOA because of its inherently deflationary properties. There will never be a consistently expanding BTC economy as hoarding makes more sense than actually spending it.
The people who like BTC for having a fixed cap on the amount of coins in existence are probably the same people who would like the gold standard back, because they don't understand the economic consequences.
Isn't Bitcoin's success as a currency orthogonal from the negative effects it might have on the economy? If individuals think holding Bitcoin is better for them than holding dollars, they will do it as long as it's legal.
As far as the economic effects, I think we'll be much better at managing a deflationary economy in 2030 than we were in 1930. We have more knowledge, better statistics, and better communication. At its core, the sticky wages problem is a communication problem.
In a world where Bitcoin has already been adopted by the masses, holding Bitcoin would make almost as little sense as holding dollars does today. Sure, its value will go up, but not as much as investing money in companies that make more money would.
