> I believe this works via the routing system. So even though you don't have any more BTC in your initial allocation, you can get some from someone else still in the lightning network.

Okay, so I could buy BTC from coinbase without making a single blockchain transaction? I still don't quite follow how this would happen within the trustless network, though. Now, if you get your salary paid in lightning, then of course you just wait for your next paycheck, but otherwise you need to pay fiat to someone in the lightning network or make a transaction in blockchain?

> Currently coinbase does not "loan" out any money you deposit with them, but there is no reason they couldn't. And I'm assuming that custodial services like Coinbase will eventually follow the same path as banks as bitcoin grows

That is about to open an extremely interesting rabbit hole just there:) First step is for Coinbase and their customers to realize that the custodian services can be much cheaper if coinbase is allowed (very prudently) to lend the coins forward. So much cheaper, actually, that Coinbase will pay you if you use their custodian services with letting Coinbase to lend your coins forward. Second step is for Coinbase and their customers to realize that as Coinbase is very prudent, a coin at their "custody" is actually as valid token for payment as a coin in a custody of their customer. Bang. You are in fractional reserve banking, and there suddenly is no more only 21 million bitcoin denominated payment tokens, but Coinbase is able to create more of them. (And trust me, there are some really good reasons why fractional reserve banking is very tightly regulated business). The last step is, of course, to realize that it actually is burdensome to have Coinbase to link the credit creation to physical bitcoin, as they are practically a distraction in the process, so we can move to full fiat currency.

> Now this is where my understanding begins to break down. I'm not an economist,

Frankly, I doubt anyone understands money properly. It is one of the most complex and fascinating concepts I have stumbled upon (and I am no economist either). My working hypothesis is that any simple statement about money is somehow false.

> People will always need to buy things, and people will always want. I don't buy a house on credit because the interest rate is low,

But if interest rate is lower, people do buy more stuff. The companies invest more to machinery if the interest rate is low than when it is high. That is a very fundamental thing in how economy works. Further, we need to keep people buying stuff to keep those people (i.e. most of us) employed who are selling the stuff. Also people save more (which equals to buying less stuff today) if the interest rate is high. So we can adjust the aggregate demand in an economy by adjusting the interest rate. And if we have artificial limits on how to set the interest rate, we are going to have welfare losses. So we for sure would need to be able to set negative interest rates.

> If I'm going to give you a loan, you need to pay me more value back than my money would make just sitting around.

And that is exactly the problem with current money and bitcoin. You can let money just sit around, which sets the artificial lower limit to the interest rates. But the interest rate is the price for you postponing your consumption and yes, we are very used to the idea that if you agree to not buy 100 pizzas today but lend that money to someone, they are more than willing to promise you more than 100 pizzas in one year's time. But if there is nobody willing to make that promise of more than 100 pizzas, and you still want to eat pizzas in one year's time, what is so wrong with getting only 99 pizzas, if that is what the "consumption postponing market" at the moment offers? (note the distinction between fiat and bitcoin. With fiat, there are organizations, contracts and laws made for the purpose of guaranteeing that your fiat money is approximately worth 100 pizzas plus interest rate in one year's time. With bitcoin you can only hope that there is someone in one year's time willing to pay 100 pizzas for your bitcoin. (Again, same applies currently to gold)

> currently treat the deflationary nature of Bitcoin as a large benefit, but if it was found to be hurting most or all involved, that tune would change quickly.

Well, my understanding from the history of money is quite clear that deflationary monies are bad for society. (sorry, should have sources here).

> it requires a consensus from both the miners, users, and developers to make any changes. All of which distrust one another.

Apologies for being cynical, but to me that reads about "there is no practical way to make important changes in any timely manner". That's the power of democracy. You can run over minorities if needed.