My GOLD and BTC are fiat currencies because there is demand for them to serve debts and tricky part is that there is not enough money to serve debts the weakest ones will lose only the strongest ones could serve their debts everbody looking for money as much they can to serve their debts also higher taxes takes a lot money out of the society from circlelation aswell and sending this money for example ukraine out of UK means more debt added to people but less actual money the currency is there so scaricity of currency.
Before saying anything else we need to know what is fiat currency, according to wikipedia:
Fiat money is a type of government-issued currency that is not backed by a precious metal, such as gold or silver, nor by any other tangible asset or commodity. Fiat currency is typically designated by the issuing government to be legal tender, and is authorized by government regulation. Since the end of the Bretton Woods system in 1976 by the Jamaica Accords, the major currencies in the world are fiat money.
the term government-issued currency signifies that Bitcoin and gold are not fiat currency, being called fiat currency does not need any demand, or the ability to purchase, it is called fiat currency because it is backed by the government and the government demand it to have value.
I do not know how could you create a scenario full of flaws and misunderstandings. Like stating that due to debt there would be a scarcity of money thus deflation appears but it should not be termed that way, Wikipedia states deflations as:
In economics, deflation is a decrease in the general price level of goods and services.[1] Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Inflation reduces the value of currency over time, but deflation increases it. This allows more goods and services to be bought than before with the same amount of currency. Deflation is distinct from disinflation, a slowdown in the inflation rate; i.e., when inflation declines to a lower rate but is still positive.[2]
So are the price of goods decreasing? No, it continuously increasing instead, this simply show the devaluing of currency thus inflation occur.