[wynand]

I don't know enough about economics to give a qualified answer but let me try. All currencies are vulnerable to feedback loops but governments can do things like change the interest rate to encourage/discourage spending. I don't understand how this would be possible with Bitcoin.

I overlooked the Bitcoin limit - price inflation will certainly be limited through this mechanism. But I wonder if this might not cause prices to drop at a constant rate (since Bitcoins are so divisible) - this would include labor costs (although how wage stickiness would hold up to this remains to be seen).