This is a term thrown around a lot. "Deflationary" has different meanings in different contexts.
Conventional economists use "deflation" to mean "price deflation" -- that is, the price of goods, on average, decreases over time, as denominated in the currency in question.
Austrian (heterodox) economists often use the term "deflation" and "inflation" to refer to changes in the money supply, rather than prices.
In the crypto space, people often use the term "deflationary" to refer to currencies that do not increase exponentially in supply; or more specifically whether the marginal change in supply is decreasing.
For 1, no -- saying "Ethereum is deflationary" is equivalent to saying "the value of Ethereum will always go up", which is clearly nonsensical, because it's saying that Ethereum is a risk-free investment.
For 2, no, Ethereum is not deflationary, the supply increases linearly, so the supply is always increasing.
For 3, yes, Ethereum is deflationary, because the supply increases linearly, which means the marginal change in supply tends to zero.
Your question about investments seems to be following the implication that if 3 is true, then 1 must be true, since they both use the word "deflationary". That may be the case, but I would hesitate to think that a mechanical system can guarantee an increase in value.
> people often use the term "deflationary" to refer to currencies that do not increase exponentially in supply
People use "deflationary" for hard-capped supplies,
"disinflationary" for uncapped supplies that have yearly inflation rate going down toward 0 (such as with a pure linear emission), and "inflationary" for emissions whose yearly inflation rate stay above some constant greater than 0.
>For 1, no -- saying "Ethereum is deflationary" is equivalent to saying "the value of Ethereum will always go up", which is clearly nonsensical, because it's saying that Ethereum is a risk-free investment.
It does make sense if you compare a less inflationary currencly to more inflationary currencies. It's risk free in the sense that the USD exchange rate will keep up with inflation of the USD in the long term.
This is confusing definitions again. Are you using "inflationary" here to refer to the supply of the currency? If so, then sure, but 1) refers to price inflation/deflation, which is not a predictable thing.
So you can compare how "inflationary" currencies are by 2 & 3, but not by 1 -- that's not a mechanical effect. Even the most stringent monetarist in the world wouldn't at a minimum factor in monetary velocity into the value equation. And monetary velocity is a behavioral thing that can be mediated both by availability of current and future capital as well as liquidity preferences of individuals viewed in aggregate.
Conventional economists use "deflation" to mean "price deflation" -- that is, the price of goods, on average, decreases over time, as denominated in the currency in question.
Austrian (heterodox) economists often use the term "deflation" and "inflation" to refer to changes in the money supply, rather than prices.
In the crypto space, people often use the term "deflationary" to refer to currencies that do not increase exponentially in supply; or more specifically whether the marginal change in supply is decreasing.
For 1, no -- saying "Ethereum is deflationary" is equivalent to saying "the value of Ethereum will always go up", which is clearly nonsensical, because it's saying that Ethereum is a risk-free investment.
For 2, no, Ethereum is not deflationary, the supply increases linearly, so the supply is always increasing.
For 3, yes, Ethereum is deflationary, because the supply increases linearly, which means the marginal change in supply tends to zero.
Your question about investments seems to be following the implication that if 3 is true, then 1 must be true, since they both use the word "deflationary". That may be the case, but I would hesitate to think that a mechanical system can guarantee an increase in value.