> Why would you? You can get better returns by simply holding it (since it is deflationary) than by lending it out or investing in productive assets.

There's obviously a balance in this scenario, as slower investment pace, makes for slower expectation of BTC value increase.

Only "investments" of very low expected return are being prevented by lack of monetary inflation.

If BTC-based monetary system produces relatively slow .5% global growth, that means only investments with expected return lower than .5% are not going to happen. Which is a feature, not a bug. It makes growth cycle much more stable and self-balancing. Too high growth slows down investing cycle, low growth speeds it up. No need for central bankers.

And it's not that much different than current monetary system anyway, where people just throw they currency into speculative, unproductive assets to escape inflation. Nowadays things like housing serves the role of Bitcoin.