The code doesn't differentiate between generated or "original" coins.

That's why it's exponential.

Hyperinflation in itself isn't necessarily a bad thing as long as every coin wallet inflates equally.  This is being experimented on through Hyperstake (HYP) and the coin's value does exactly what you would think it does... decreases as the money supply inflates.  The difference between the two coins is that every wallet stakes at the same rate so every HYP is inflated equally (assuming every HYP competes for stake) while XPY inflates disproportionately, favoring up to 50 wallets.

This, using simple math, means that everyone's wallet will not inflate equally and, therefore, will create exponentially increasing downward pressure on the non-favored wallets' value.