A currency is not considered inflationary or deflationary based on its exchange rate to other currencies.  You have to stop thinking about it's "price" when considering whether or not Bitcoin is deflationary.

Talk to an economist instead of spouting your misguided theories.

Every coin you stash away diminishes the number of coins that will enter the market, thus inducing even tighter competition for coins and pressing prices down even stronger. If prices fall below some level, producers start cutting production which ultimately leads to unemployment, impoverishment and overall depression...

That's why deflation is ultimately bad for the economy!

Who says I am talking in terms of an exchange rate with other currencies? I am talking in real terms; production divided by the number of coins. Back to Start.

Imagine a weekly market with a pile of clothes on one side of the square, and a pile of coins on the other. Every week the pile of clothes is a little bigger, and the number of coins stays the same. You are saying that the price of clothes next week MUST be lower because there are more clothes then. But what is going to happen now then? People will wait with their purchase to next week, not buying clothes now. So this weeks demand for clothes drops and prices will fall NOW. Hey presto, there is your increase in the purchasing power of your coin already. The price of clothes will be almost the same, this week and next week, so NO deflation, even though we know there will be more clothes next week.

Again, simply because the production per bitcoin will go up and up, that does not automatically mean the purchasing power of a bitcoin will always go up. There is no such link. Today's price already incorporates the expected rise in the demand for the coin because of increased use.

Bitcoin is NOT deflationary. There is no free lunch. And that is economics for ya.

Because now you can buy with 1 BTC more than you could a year ago... If you denominated prices of goods in Bitcoin, you would see that within that year they would be falling as long as the BTC exchange rate was growing...

This is what deflation means, i.e. increase in the purchasing power of your coin, meaning that you could buy more with less coins. But if you think this is always good then it is you who will ultimately be proved wrong...

Yeah, no.

deisik:  I feel your pain, debating these Troglodytes.

That said I think the Quantity Theory of Money could be of assistance.  It is a simple and ancient formula that every economic school aknowleges.

The Formula is M * V = P * Q

M is Money Supply
V is Velocity, the number of times each money unit is transacted in the defined time period
P is the Price level of Goods and Services
Q is the Quantity of Goods and Services exchanged during the defined time period

Now once we have this formula we can clearly see that when any one factor is going up or down it must be balanced by a movement of one or more of the other factors (which factor tends to move more or less is a whole other area of debate).

If we assume that Q quantity is going to rise then their are 3 possible response, P decreases (deflation as prices are dropping), or an increase in V or M.  Now in BTC M is completely fixed (and in reality it will decline slowly from lost coins).  So this leaves only higher V and lower P as options.  Velocity in BTC could indeed rise a lot as most coins are hoarded but the overwhelming attitude is one of holding onto coins with a death-grip, and even if people did hoard their are probably practical limits to have high V can go.  This leaves a falling P as the only real option and hence the prediction of deflation (which has been spectacularly correct).  Really their can be no argument here both the pro and anti BTC sides of the debate expect deflation.

Thanks for your support, will take Irving Fisher's formula into my arsenal of weapons against these cavemen...

All you are showing is the limits of the Fisher equation of exchange. The equation is a tautology, causing more damage than good in understanding money.

When I am saying people will hold on to their money now and spend it later, that can be interpreted as lowering the velocity now, and increasing it later. Then you will understand that that is consistent with a stable price level and an increasing quantity of goods.

There can no longer be "later" you refer to... If you don't buy today, the producer just won't sell tomorrow, because he will have to cut production and fire his staff... Is it really so hard to grasp?