Quote from: thefiniteidea on February 02, 2013, 10:57:48 PM

MoneySupply-Inflation is when the value of Bitcoin decreases when the total supply of Bitcoin increases. In our current state, this is at a generation rate of 25 BTC every 10 minutes.

After just bashing the "keynesian" definition of inflation, you segue right into your own piss-poor definition. Money supply inflation is when the total money supply increases. No more, no less. It does not necessarily mean a change in the value, because if the money supply increases at the exact same rate as the increase in demand, there is no change in value.

Quote

MoneySupply-Deflation will essentially never occur. It is when the value of Bitcoin increases when the total supply of Bitcoin decreases. This may happen, say, when someone loses their private key and all the BTC associated with it are lost.

First you say it will never occur, then you say well it could and does happen.

Quote

That being said, there is a SET DECREASE in the generation rate of BTC, so you have sort of a "deflationary effect" in the value, as long as more exchange occurs for BTC at a rate which is faster than that set generation rate.

The set decrease in the generation rate would be called "money supply disinflation" if you want to, god forbid, use another modern economics term. And exchanging money for services at a faster rate than the generation rate has no deflationary effect, only the demand for currency itself affects its value. If the velocity of money increases to account for increasing exchange, there need not be any change in value.

Quote

When all 21 million coins are produced, the MoneySupply will be neutral, and the value will continue to increase (prices will decrease, consequently), as long as people continue to exchange in BTC.

Again, exchanging does not increase value, demand for more currency will.