keynesians argue that the inelasticity of the gold supply was crippling economic growth during gold standard times in the 19th century. that is the origin of the narrative of deflation being negative for the economy. and there is definitely some truth to this.
the trick is that in fiat the elasticity is displayed in front of the dot, more money units are needed, leading to inflation. with bitcoin the elasticity is moving to the right side of the dot, making whole bitcoin more valuable without inflation.
Which leads to the logically consequent question - is there anything in the protocol, or some new software layer in the works - that can provide proof of non-hypothecation?
I'm sure that given the ongoing custom - habits are hard to break - most of the traditional finance world won't take "move inflation the other way - to the right of the decimal dot" so easily. They'd rather rehypothecate, as they are doing for gold and for derivatives based on gold (basically paper money). This is as close to double spending as you can get with btc - through a layer of obfuscating paper. Much too close for my taste.
Once TPTB have their hands on bitcoin, they will come up with new and ingenious ways to keep doing old, disingenuous deeds. One way to avoid that would be a simple way to make sure each satoshi is only hypothecated once, if at all.
Example: I buy a bitcoin ETF, "bakt" by the RealThing. Good. Now I want to know the public address of the btc backing my ETF, and be sure it only backs my shares, not someone else's too. And a loan. And some enterprise capital in some other firm. If such information is easy to find automatically, we can be relatively sure that there will be stern laws against re-hypothecation, and they will be inflexibly enforced.
