I recommend reading David Graeber's "Debt: The First 5,000 Years". IIRC it has a good chapter on demurrage, as well as covering many historical currencies which by accident of design were similar to modern demurrage currency in operation.

By adding a component of inflation, you increase exchanges.

Let's just get rid of the cap and keep things simple.

edit: Of course from a micro-economic perspective this doesn't make sense unless it was forced onto us by a government as a de facto standard.