This is an interesting topic that I sparked up back then once just for discussion purposes — safe to say a lot of people didn't like it lol.
If this trend continues most if not all bitcoins would have been lost by then.
It definitely wouldn't be like that. Sure, the supply still shrinks and shrinks slowly, but as time goes bitcoin goes up in value as well. People will be incentivized to not lose them; not like back then when bitcoin was merely a few cents so people didn't care much about their private key backups.
Good because it's actually a bad idea. What would the purpose of POW and holding our own keys if there was a "legal" form of taking someone else's property away from them? Who decides which UTXOs are "lost"?
The same kind of topic was also suggested by an individual called Craig Wright.