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I recently read a good article why deflation is poison for a economy, unfortunately it's in german so hard to quote here. Although, money (currencies) need fluid flow because they have no physical value when they are not a medium for transactions while commodities like gold or raw goods have physical value and are consumed this way. You can not do anything with coins besides spending them, and if you don't, they are as worthless as the physical value of the papersheets in your pocket that you can as well use decorating your walls if you are not going to spend them.
What makes you think that creating new coins and giving them as interest is deflation? Creating new coins from nothing is _inflation_. Yes, giving them out as interest is deflation, but in the exact same amount as the inflation caused by their creation! MintCoin is neutral, just like any other capped coin. Except that you don't need to boil the oceans to keep it secure.
