Under the Bitcoin standard, people will still borrow Bitcoins to buy houses or other assets. These loans will be cheap, like 0.5% rather than 5% and they will have high liquidation penalties.

Example: You have 5 Bitcoins and you want to buy a house worth 10 Bitcoins. The market value for this house right now is 10 Bitcoins. The loan issuer will happily accept the house as collateral and give you the loan. You both agree to use a market analyst who estimates the value of the house at any time. Right now it is 10 Bitcoins. And you agree to liquidate the house if the debt value + liquidation penalty (say 1 Bitcoin) > the value of the house.

You are now 5 Bitcoins in debt with 5% interest rate.

You are right to assume that the value of the house COULD go down in value with respect to Bitcoin over time if the value of Bitcoin keeps going up. In 2 years, say the market analyst says the value of the house is 5.5 Bitcoins and you are still 4.5 Bitcoins in debt. You made a bad investment.

So this triggers a liquidation where the issuer sells your house for 5.5 Bitcoins and will keep the entire amount as the penalty is 1 Bitcoin.

I don't see a problem here. Do you?

Ideally you do not want to buy a house by borrowing Bitcoin unless you believe the house will outperform Bitcoin in 10 years. Which might happen by the way, Bitcoin cannot keep going up with respect to every other asset in the world. Some real estate will definitely outperform Bitcoin once it reaches the $100T range.

Now, why would you take a loan in Bitcoin? Because there are no other currencies in the world still standing. The issuers will only issue loans in Bitcoin. Because the issuer does not want to hold any other currencies.

The Bitcoin standard will fix everything. Ahahaha