Quote from: jtimon on August 05, 2011, 05:30:26 PM

If you destroy the money through transaction fees, you don't have direct control over coins destroyed by transaction fees CDT, you just can change the mandatory transaction fee rate MTR.
Even worse, when you increase MTR to fight ~~deflation~~ inflation, V goes down, reducing CDT, making you increase MTR even more...a positive feedback that takes fees to the sky and stops transactions completely. It is better to have ~~deflation~~ inflation than no trade at all.
I don't think that morpheus's proposal can work as it is.

I don't think destroying coins through higher MTR will cause the spiral you predict.

If the transaction fees are increased to avoid inflation, then it will cause people to avoid transactions. However, it would also cause people to ask more for their coins to cover the transaction fee which would cause deflation which is the goal of increasing the transaction fee in the first place. The would break the transaction fee death spiral and stabilize the price of the coin.

Actually, the transaction fee may never get paid if the threat of a transaction fee causes people to hoard Stablecoin and drive prices back up.