> In a transaction where one asset is inflationary in relation to another...

Yes, and this happens in the real world. You'll find that when an asset is deflationary (ie, its price in USD is increasing), buyers try to delay payment so they can hold onto their dollars for longer. The asset being deflationary is exactly the same thing as the currency being inflationary (in this simply two-component system): In the future the asset is worth more and dollars are worth less, so to get the best deal you want to pay with the least valuable dollars, which are future ones.

> Another argument...

Depends on the level of deflation and your expectations for the future. If Bitcoin replaced the world's currencies, it should be worth "a few" (handwavey order of magnitude) million USD per BTC[1]. Even if it just replaced the USD it would be worth hundreds of thousands of today's USD. And that assumes that all 21 million bitcoins are available for use in the economy. It is currently trading at about one hundred USD per BTC. Are you seriously telling me that you would trade a Bitcoin for a few cases of good beer right now and give up millions in future value? If Satoshi is holding on to orginal bitcoins right now he'd be stupid to spend them not because someone could blackmail him, but because he could be a multi-trillionare in a couple decades.

Let me put this another way: If bitcoin "only" deflated at 10% per year (the number you picked for beer), it would take around a century (100 years) to deflate enough to replace the world's currencies. You'd probably be dead before it's big enough to replace just the dollar. And 10% is huge. Imagine if we had 10%/yr inflation for a century. Would that be a good thing? Do you think 10% inflation could be maintained for that long without a vicious circle causing hyperinflation?

> Third argument: even if everyone is holding their money, what's the problem?

Because this amplifies the vicious cycle. Hoarding money pulls it out of the economy, which increases deflation. That makes people want to hoard their money. Which pulls it out of the economy, which...

> The minute someone needs something, they'd have to pay for it. They would prefer to consume less if cash appreciates and consume more if cash depreciates. But there is no magical threshold after which money becomes so expensive that everyone stupidly dies of starvation.

So this is interesting: It works fine if we pretend that our amplifier is relatively linear and has a healthy amount of negative feedback and plenty of phase margin. Unfortunately, things in the real world aren't quite so simple. What happens when all the farmers decide not to plant crops (or not beyond a sustenance level) one year because each one knows that he will be better off saving his money to buy seeds next year? Futures markets can help with this a little, but those are prone to bubbles, too. By the time the price signal trickles back through the feedback loop you already have people starving. Google for the MIT beer game. Oscillations "shouldn't" happen in that system, yet they do. The cause of the oscillations in the MIT beer game is delay in the feedback network. It's directly analogous to an op-amp circuit.

So, bitcoin might work in a soviet-style, centrally planned economy, where someone with a bird's-eye view can dictate the output of various industries. Maybe bitcoiners want central planning. I don't know. But, know that I would prefer not to have that.

[1] It was a while ago, but I calculated the approximate world money supply using numbers I found on wikipedia. It's something like the equivalent value of tens of trillions of USD (trillion=1e12), and there are at most tens of millions of bitcoins (million=1e6). 1e13/1e7 ~= 1e6. This is a very very rough estimate, but it shows that the current value of bitcoin isn't even close to being in the same county as the ballpark compared to what it needs to be to reach its apparent goals (world domination). If you really think that bitcoin is going to replace USD, buy as many as you can get your hands on for whatever price anyone asks because you're buying them for fractions of a penny on the dollar. (note: this is not actual investment advice and I am not an investment adviser)