I agree with you.

Today the markets are not large enough to support multiple merchants who's input is in fiat, hence it will be in their interest to sell the newly acquired BTC and withdraw the fiat from the system straight away, in effect damaging the markets.

Currently we are in a situation where the markets are driven by speculation, and the merchants play only remote secondary role to the development of the markets. I personally do not expect this to change for some time, not until broader adoption of the BTC occurs and not only by speculators, but across the spectrum of users.

The OP premise is that by using merchants to buy goods we would be "helping" the Bitcoin economy. I stated that the current economy's nature is not what everyone thinks it is, it has changed dramatically over the last 4 months, hence today, by using merchants to buy goods and pay them in BTC, we would be damaging the economy.

To clarify, I am assuming that helping the economy to grow means driving the price of BTC and the total market cap up, and damaging means driving the price of BTC and the total market cap down.

In retrospect, I see my mistake as emphasising on the potential damage buying goods with BTC could cause to the economy. I should have stated that in today's climate, such damage will be minimal, negligible, irrespective of the good intentions and the efforts of the people to "help" the economy. I also should have stated that if one wants to help the economy, one should have gone and purchased BTC, contribute to the driving the price up, then hold for long period, until the markets stabilised to +/- 0.01% daily fluctuations. That will be the sign to watch for. AT that time the Bitcoin economy will be deemed mature, the short-term speculators would have left long-time ago, and the Bitcoin would have been described as a great store of value, very similar to the precious metals.

That's what I think.