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Comment by kevinak | Hacker News Reader

I'm curious why you think this is the case. It's close to impossible (good luck convincing people to devalue their money) to increase the Bitcoin supply other than through minig.

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Loans create “virtual money” in a way, which does contribute to inflation (in fact, controlling lending is a primary way the federal reserve controls inflation)

Yes, in the current fiat system that is the case, but there is no way for someone (a bank or government) to inflate the supply in world where Bitcoin is the currency everyone uses.

No, you increase the amount of IOU's. I own 1 bitcoin, and everybody knows I'm good for my bitcoin (e.g., that is what a bank is. An institution everybody trusts to have money and they pay their dues.)

I know write you an IOU for 1 bitcoin, and you buy a car with that IOU, because anyone who owns that IOU can come to me and get their bitcoin, and everybody knows that I am good for my money, because that is the whole condition of this thought experiment.

I now write another IOU and give to my uncle, who buys a house with it, because everybody knows I'm good for it.

Now the money supply has increased, without minting new bitcoins, and this is exactly what happened to gold (which, as you know as well as anybody, you can't just print)

Once you ban money lending with interest, this is automatically solved.

This is why loans, except out of pure charity and nothing expected in return other than the principal, are immoral and cause chaos and destruction as we've seen time and time again. There's a reason Islam prohibits money lending with interest. Same with Judaism and Christianity before they got corrupted.

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