f there is deflation and people start hoarding money thinking that their money will value more later (so they have an incentive to start spending their money later - half the money for milk), credit creationists would intervene on this opportunity.
This logic is mathematically flawed. People don't realize it because they have never seen it.
In this situation your argument says that people would start lending their excess bitcoins (at interest I'm presuming). So what would the interest rate be in this situation?
Ah, I understand now. I've seen that some people here believe that there can be no fractional reserve banking in the BitCoin market (because there is no central bank). I believe there can be something that
works like fractional reserve banking. So, I am not saying that people would start lending their
excess BitCoin, but that some highly skilled, highly determined individuals would create credit BitCoin out of thin air, just like in the fractional reserve banking system.
Basically, while the math you gave is flawless, I am talking about human behavior. Math says that people can not have the same wealth unless they all produce the same, but human behavior says that one can rob (/ trick into relinquishing) another of wealth.