Starting with the network's 16th hard fork in December 2016, Steem began creating new tokens at a yearly inflation rate of 9.5%. The inflation rate decreases at a rate of 0.01% every 250,000 blocks, or about 0.5% per year. The inflation will continue decreasing at this pace until the overall inflation rate reaches 0.95%. This will take about 20.5 years from the time hard fork 16 went into effect.

Wait 100% inflation? Are you sure about this? 
Cause it is really important thing.

Very good disucssion. I was about to start a similair discussion. Not sure if I believe in the current crypto investment climate but I do believe in the blockchain.  We do need more indept investment analysis.  Besides coinmarketcap.com there is:  https://www.coincheckup.com This site gives you a complete in depth investment analysis on every crypto in the market.

"why would anybody invest into something that loses half of its value every year? "

I don't know ;) But people also don't buy gold, bitcoin or other better alternatives when they suffer from fiat-money inflation...
http://www.debtisover.com

I agree with @dantheman and @gavvet.

So, I believe advertisers are the end game as well... But, what will happen to liquidity? If advertisers buy up much of the steem, they are not going to let it go. Without liquidity, where is the benefit to new curators/creators?

It's possible that the best content creators who might be dolphins or whales now, could turn into minnows when they cash out to advertisers.... Then, how will these new minnow content creators make money if the advertisers are only upvoting their own posts?

The shift to advertising whales could be a huge negative X factor.

Looking forward to your thoughts.
P.S Still bullish

What's missing from your understanding is that Steem Power is protected from inflation. If you Power Up, your Steem is "mostly" unaffected by inflation, in exchange for reduced liquidity and increased voting power. I say "mostly" because it's not 100% protected, but the math is a little confusing so maybe someone else can explain that in a better way.

Why do you think that huge amounts of Steem will have been powered down 2 years from now? If Steem is a success I'd think it would be the opposite, that huge amounts of Steem will remain locked in Steem Power form in order to provide voting power to users.

I recommend reading the [white paper](https://steem.io/SteemWhitePaper.pdf) as well as this post and its discussion: https://steemit.com/steemhelp/@aem/steem-for-noobs.