The Bitcoin supply has only been inflating at consistently lower rates (e.g., ⅟ₙ₊₁ after 𝑛 blocks when the Bitcoin block reward was fifty bitcoins), so a progressive reduction in spending would seem to be expected under the economic theory.
The theory applies to monetary systems (macro) not some small gambling party.
Krugman was saying Bitcoin could NEVER work as a monetary system because it's designed to be deflationary. I.e. People would hoard instead of spend
Well he is smart, but he is not smart enough to grok that a trade always have two sides, and
if the deflationary trait of the money means less buying, then the inflationary money would mean less selling. Why sell now when you can get more money for the same thing next year?