This isn't really accurate. Satoshi knew exactly where it would go and he never dismissed Hal's outlandish predictions about the value of Bitcoin's either during the conversation in the
cryptography mailing list.The fact that new coins are produced means the money supply increases by a
planned amount, but this does not necessarily result in inflation. If the
supply of money increases at the same rate that the number of people using it
increases, prices remain stable. If it does not increase as fast as demand,
there will be deflation and early holders of money will see its value increase.
It isn't accurate because JorgeStolfi was either trolling or stubbornly ignoring facts. I already explained to him a few days ago, complete with numerous quotes (though I missed that one -- thanks for finding it), that satoshi was well aware that Bitcoin not only would be a speculative asset but that it was absolutely expected and even required that it would function that way.
It is amazing how people can get such different readings from the same words. (Just yesterday I was arguing with someone who, like many libertarian bitcoiners believed that the genesis block quote was proof that Satoshi was libertarian and designed bitcoin to get rid of banks and "fiat" money.
Yes, Satoshi obviously designed bitcoin on purpose to have a finite total issuance. That was a natural mistake, because he -- like almost everybody, including myself until 2 years ago -- believed that inflation was a bad thing, and that good money therefore should be inflation-free.
But there is a Grand Canyon between that and "was well aware that Bitcoin not only would be a speculative asset but that it was absolutely expected and even required that it would function that way". I have read somewhere that it was Hal Finney, in fact, who first thought of bitcoin as investment; and Satoshi's reaction was like "oh, yes, you may want to keep some".
Note that, in the quote above, he is referring to price increasing as the result of growth of demand, not of speculation itself. In another quote he tries to estimate the growth of the user base, and says that 20% per year (double every 4 years) would be a "crazy rate of growth. By that "crazy" rate, the price of 0.05 USD/BTC in mid-2010 would be ~0.50 USD/BTC now.
While he does not say that explicitly, that "crazy" price increase rate would be also consistent with his choice for the parameters of the block reward fomula (halving every 4 years). If the price increase was less than "crazy", say 10% per year, the value of the block reward too would decrease 10% per year, on average; forcing a gradual transition of the mining revenue from block reward to transaction fees.
Instead, speculative trading cause the price to increase 10x per year over the next 4 years, so that the value of the block reward increase instead of decreasing. That made mining into an industrial activity, which was inevitably concentrated (a development that he, and any rational person, would have seen as disastrous for the project). That level of speculative trading also caused huge volatility, that made bitcoin unsuitable as a currency.
It is absurdly delusional to claim that Satoshi had foreseen these developments, and that they were part of his goal. The world did not need another speculative instrument; he would not have spent 3 years designing a crazy one. There is no sense in having naive investors give 1 million dollars each day to secure a payment system used by less than a million people.
EDIT: typo "5 years --> "4 years"
