The inflation adjusted rate of return on Steem Power has just recently gone positive as Steem Power now accounts for less than 90% of all STEEM.   Only 86.4% of Steem is currently held as Steem Power which means that SP holders are growing in percentage terms.    This is a market established rate of interest.

Under the proposed changes the same market forces will be at play.   15% of all newly created STEEM will be paid to Steem Power holders.    Lets assume that there exist 100 STEEM and 86 STEEM is held as Steem Power in one account.   A year from now there will exist 110 STEEM and those with Steem Power will have 87.5 STEEM which will account for 79.5% or an effective loss of 7% which was redistributed to content producers.

Meanwhile if you were not Powered Up, then those holding the 14 original liquid Steem would have a 9% dilution to pay for new content / distribution.   

There is now a much smaller difference between Steem Power and Steem in terms of inflation adjusted rate of return and in terms of liquidity.   

I suspect the market will find a new equilibrium between Steem and Steem Power.  For Steem Power to have a positive inflation adjusted rate of return will require significantly less people to hold Steem Power.

The real value of SP its influence over allocating where the other 75% of new steem is spent.  Under the proposed changes this will be the primary value driver rather than the "inflation hedge".

Thanks for upvoting my joke yesterday.  Upvoting this.  Following you.

Actually, the proposed change appears to have caused demand for STEEM.  One theory is that under the proposed rules, the nominal interest will be reduced, so holding more STEEM Power before the rules change is an advantage.

Your interest has not changed that much.

Before your interest was effectively -10%. That is 90% APR + 100% money supply increase = -10% effective decrease of your SP percentage relative to everyone else.

With the new system the money supply increases by 9.5% per year but you get 15% of 9.5% back as interest = 0.1*0.15= 100% - 9.5% +( 10% * 15%) = 90.5% + 1.5% = 92%. In plain english your dilution was reduced from 10% to 8% and everyone else dilution was reduced from 100% to 9.5%.

What stays the same is that if you do not earn extra by contributing via curation or content creation or being a witness your holdings will be diluted and that value will flow to the accounts that create value to steem.

Thank you. I upvoted, followed,  Tweeted.

Interesting mike atm it seems to be helping but I think 3 months is too sort but who knows, upvoted back thanks.

I suspect with a three month power down some will rush to cash out. I don't think the interest changing matters. Its like you get less of them but because of it they become worth that much more anyway. Yes you will get slightly less of the pie going forward inr elation to content creators but if that causes Steemit to grow it is a net positive for you. also if you are a big holder of sp and you post you will simply make more for posts.... I think