Big O, you raise excellent points. I sense we share the same concern for the fragility and problems created by the status quo. I tend to agree with your points about purchase of wants versus needs. Though I think the real issue is (or should be) freedom of choice - so that the average person choose to work and save money for the future or spend it now, can choose to borrow or save, and ultimately, can choose his or her own definition of wants and needs. Moreover, the average person should be able to make these choices without regard to the currency in question or systemic ramifications of that currency. Stability of the value of an individual unit of currency creates stability of freedom for the individual.

Regarding deflation, there are two types of deflation: good deflation and bad deflation. Good deflation is characterized by advances in productivity and the simultaneous lowering of costs. As costs fall, prices fall and [product] markets remain healthy. In contrast, bad deflation is characterized by excess debt and the stifling of economic activity. Yes, it includes the unwinding of levered up activity as historical uses of credit had stolen transactions from the future. However, it also includes a downward spiral where prudent uses of debt and credit are likewise overwhelmed by falling prices. These discrete phenomena coexist. (For example, if you put 40% down on a house and the rest is mortgage, you are still underwater if the house falls by 50%.) If, and ONLY if, the world develops and maintains a commitment to Bitcoins, then the holders of Bitcoins will prosper enjoying real increases in wealth and the holders of fiat will suffer experiencing real declines wealth and in living standards. Debt deflation would likely be the norm and free market equilibria might never be achieved. As mentioned in the article, Bitcoin would be a common enemy of governments that wish to preserve the status quo. So, to the degree it gains traction, governments will get more and more interested in counteracting it. Already the ECB and the FBI have been looking at Bitcoin... and no doubt many more government agencies. Bitcoin is clearly a competitive threat.