You can't make people hoard or not hoard BTC. It is not your call.
Hoarding does happen and it will happen. Some people may hoard for very long time, and you cannot do anything about it really.

I like the market the way it is now. Sure, there will be ups and downs, but more inflation will not fix anything.
If you create new "Inflacoin" and start from scratch, the effects will be exactly the same. The early adopters will start their rigs first, acquiring 70% of the currency before it becomes popular enough so that other miners will want to risk joining.

So what you are proposing does not fix Bitcoin childhood problems at all.  And at the moment we are experiencing childhood of the currency, so instability is expected.

You cannot fix instability with more inflation !

If I was gonna do it, then I probably would set it up with the following parameters.

Same 21 million just like Bitcoin.  There is nothing wrong with this number.  But instead of 50 coins for the first 210000 blocks, I would make the reward try to mimic an objective measure of the community size with a formula.

Here is an example formula (BTC per block) for that: B * (ln(difficulty)² 4)  where B is a percentage of coins not yet distributed (1 for 21 million, 0.5 for 10.5 million, 0 when they're all distributed).

This would result in 50 coins being given out per block once the difficulty reached 2.3 million.  Current difficulty of about 70000 would pay about 30 coins.  If I fired up just my own GPU's (eight 5970's), the difficulty would be about 700 and the payout would be about 9.50 per block.

Then I would correlate the maximum block size with the difficulty.

Yep, but have some sort of minimum network-mandated fee that allowed both miners and payers to exert some sort of force on the going rate so as to permit an equilibrium to form.  Some random ideas:

1 - A default recommended fee generated by the system is one that would be based both on the blocksize and difficulty, such that it would pay the same as B=100% when exactly filling a block, but the minimum fee should be no more than 1% of a transaction.

2 - A minimum fee imposed by the system MOST of the time would be a function of what minimum fees have been accepted by MOST miners in the last 100 blocks that were at least half full.  That way, the majority of miners can exert upward pressure on the fees, but not by refusing to process transactions at large.

3 - Special case, if someone is willing to generate a block whose own SHA256 hash ends in 00, the current block may be exempt from minimum fees imposed by the system.  Maybe such a block can get a special name, like a sludge block.  These blocks would serve as exceptions to the minimums.  This block would allow miners to exert significant downward pressure on the price, but would be 4 times as difficult for them to create.

So transactions with no or insufficient fees have a chance as to when they might eventually get through.  So if the mining community at large is pushing for a fee that's too high, payers can start offering lower transaction fees.  If enough low-fee transactions start piling up and look desirable, someone can start mining for sludge blocks - which will have 4 times the difficulty, but might be more profitable if payers are both unwilling to pay the minimum fee and willing to wait for the next sludge block to be mined to make a point of it.

Why this might work:

* people can still get free or name-your-price transactions but will be forced by the network to wait a while
* miners of normal blocks can optionally exert upward pressure on the transaction price, but too high of such a price will incentivize sludge mining
* sludge mining would exert a downward force on the minimum transaction fee and would be a windfall for sludge miners, but only when the normal miners are asking too much so as to make it worthwhile and the payers are willing to vote for that with how long they wait for transactions.

Isn't that like a "terrorist attack", but using nice language?  You know, how they went from "Immigration and Naturalization Service" to "Department of Homeland Security"?  It sounds so much more, you know, homely, when the word "home" or "community" is slapped in the middle of it.

Though, I'm interested in hearing a plausible scenario as to what "in my favour" could be.  Kind of like, fill in the blanks:  I am a ___A___ who will be ___B___ if the suggestions I'm proposing were accepted by the community.

A) waiting in the bushes with a fistful of cash, B) eager to see BTC at 0.06 so I can buy it up?

A) someone with lots of BTC, B) happy to see it drop in value?

A) B)

Changing the very foundations on which a currency was built is an attack, no matter what.

The government doesn’t encourage you to make your own system if you don’t like theirs. They want to force it upon you.

I want you to make your own blockchain instead of tampering with Bitcoin. If you ever damage Bitcoin’s trust in this way, I can assure you they will be worthless the next day.

My Bitcoin wealth is private, but I have enough to be concerned. Still I appreciate your input, because now I’m pretty sure that inflacoin wouldn’t succeed.

Okay, how do we tell what is "changing the very foundations" and what isn't? I'm not trying to be funny here, you are proposing some kind of subjective boundaries about what can and cannot be discussed in "polite" bitcoin company ... correct?

There are probably unknown unknowns type weaknesses being let into the protocol every time a change is made but who's not talking about that?

PS: I'm partial to any formula with a natural log function in it, so I might be biased.

Casascius, whatever you are proposing, please just do it.

It would be quite a relief if we could redirect people complaining about the constant final amount of bitcoins.

Yeah, but my goal is to create a sustainable medium of exchange, not get rich into the stratosphere by mining coins and having them go up in value exponentially.

There is nothing wrong with a coin being worth 2 cents if that's it's value as determined by uninhibited supply and demand.

It is not so easy to become rich by hoarding or even cornering a commodity.  First, there is a competition between hoarders.  The less greedy gets his profit first, and reduces the price of the commodity, and thus destroys any hope for others to get rich.

Second, even if you manage to corner the commodity, your profit is not guaranted.   See the story of the Hunt brothers with silver.

I dare you to try anyway.  You'll see it's not that easy.