A circular economy can exist in the presence of both inflating and deflating money, provided that it operates under certain conditions.

To explain how this would work, let's start by looking at Bitcoin, which is known for its properties of deflation, hard cap, reduced malinvestments, and resistance to debasement and market manipulation.

Unlike traditional fiat currencies, whose values are controlled centrally by governments and can experience significant volatility, Bitcoin uses a cryptographic algorithm called proof-of-work to ensure a predictable rate of coin generation.

Since the total number of coins minted is finite, this effectively ensures that demand always remains above supply.

As the fiat price for the coin goes up with time, this creates a positive feedback loop that incentivizes the circulation of bitcoin within the economy and promotes greater participation in the ecosystem.

Moreover, since Bitcoin's architecture is distributed and permissionless, it eliminates the need for intermediaries like banks or exchanges, which can often manipulate prices through policies such as fractional reserve lending or restrictive regulations on transactions.

Now imagine if we could replicate this kind of self-regulating behavior in a circular economy, we might find ways to avoid many of the pitfalls associated with fiat currencies and conventional markets. Instead of constantly trying to maximize short-term profits, businesses could focus on creating value in the form of recyclable goods and services.

Similarly, households and individuals could participate directly in circular production cycles, perhaps even generating some of their own electricity through solar panels and selling it