> If within 1 month, with the same amount of money, you'll be able to buy 1.04 houses I think 60% annualized deflation is significantly more than the deflation

> If within 1 month, with the same amount of money, you'll be able to buy 1.04 houses I think 60% annualized deflation is significantly more than the deflation we would expect in the eventual steady state of Bitcoin. And if I was experiencing 37.5% annualized inflation (the opposite of 60% deflation), I don't think that would be particularly good either. If you meant, by bringing up a central bank, to refer primarily to monetary systems based on a central bank, I don't believe that a government (a small subset of the population which is allowed to murder and kidnap and rob everyone else, and which is necessary for a central bank to exist) is a prerequisite for trade denominated in a common currency, so I'm not sure that the way our current monetary policy works is entirely relevant. The Dallas fed wrote an interesting piece on changing policy to allow for negative nominal interest rates (http://dallasfed.org/research/indepth/2003/id0304.pdf http://dallasfed.org/research/indepth/2003/id0304.pdf), but I think we will have to settle for negative real interest rates for the near future. Discounting the central bank bit, I'm first unsure that the bulk of business has to be financed through debt, and second unsure that a deflationary environment can continue to exist given a huge loss of productivity. I would expect, if thousands upon thousands of businesses suddenly closed their doors to sit on cash, that the resulting shortage of necessary goods and services would put a quick end to the deflation. This would be extremely painful and inefficient in the case of a large deflation, but any global currency of bounded quantity should eventually only deflate as rapidly as human productivity increases.