Again, I don't seek to find a perfect equilibrium, as I'm fairly certain that isn't possible, but instead to offset the deflationary effect of lost Bitcoins. For me, the best way to do this seems to be via predictable inflation.
But that's just it. The deflationary effect of lost Bitcoins is already offset by the risk involved with holding them. There's already balance.
I feel that we are aiming for the stability of subtly different things. Please tell me what you think about the following scenario (you may assume no variation in the size of the underlying economy, no coin loss, no block rewards, and no divisibility limit):
I design an altcoin called Deflatacoin. This is identical to Bitcoin but where on each day, the balance of each wallet is reduced by 0.1% (0.1% of all deflatacoins are destroyed). This causes serious price deflation (about 44% per year).
Is this price deflation economically problematic? Should it be countered by an equal amount of monetary inflation? Is this currency more stable with or without the extra inflation?