When you invest you create bigger dollars. Someone paying interest their actual value of their dollar might be .85-.95 where the person collecting 5% interest is collecting 1.05 during that same period simply by investing rather than money sitting at 1.00 doing nothing or shrinking due to devaluation.

I sum it up as this, poor people pay interest, rich people collect it. Without devaluation of currency and if the currency just naturally grows at a rate at or higher than inflation or deflation for too long, why invest then, why take the risk if your money grows without investing? The feudal gold conundrum - the mere fact of people being born makes you richer because they have less and there is limited supply? Supplies have to increase, thus currencies have to be devalued. Devalued currencies lessen risk of investment because if you aren't investing you are holding smaller dollars over time. This fuels products like the 30 year mortgage even more, without this banks wouldn't loan as easy. People don't invest as much in deflation because they are overpaying or buying high, holding onto cash is better during those times, so increasing circulation and spending actually fuel investment due to devaluation. It is all a balance and has and will continue to evolve, it works for the most part with fiat levers to get through turbulence and momentary irrational behavior.

Now let's analyse the situation: 1) pretty obvious. Everyone who invested into bitcoin loses a bundle. When media attention dies down for some reason, or negative attention comes (e.g. a -partial- hack of bitcoin, last exchange shuts down, ...) the value crashes to zero.

"Debt slavery" continues.

2) Exactly what you claim happens will indeed happen : "People are flooding into bitcoins because they have the opposite trend from dollars". If this is true, then nothing will be able to stop it, and bitcoin will win over traditional currencies.

This will be followed by exactly what you say "the death of the 30 year mortgage, the student loan, and all the other mechanisms of debt slavery. Deflation incentivizes production over consumption, savings over debt".

Now let's assume you're born to parents with average wealth worldwide in a world where bitcoin is the only currency, and loans are impossible, due to the savings imperative of bitcoins. You can't get loans.

Everybody who today can't buy a house without a mortgage will have NO WAY to buy a house (saving houses will be just as imperative as saving bitcoins, and leaving them in your own property will be more valuable than ever selling a house). Result : most of "the 1%" does not even have financial means to buy a house in anything within 50 km or so of any major city.

You can't get student loans ... but that does not lower the cost of getting an education. So what happens ? Again anyone outside of "the 1%" cannot get anything but basic education for their children, if that. Keep in mind that we're not even 50 years removed from a time when my family could only get high school level education for ONE child (and the church paid for my father's university studies), the others would never get anything exceeding 7th grade. Even sending one child to university required both parents to work, work better jobs than most in their town could get, AND 2 children to work. This did not enable them to provide comfortable education (own room was completely out of the question).

The cost of an education beyond 12-13 years of age is essentially 20-25% of whatever wage you earn, not in a year, but in a LIFETIME. (because you'll be studying from 13 years up to 22-25 years, depending, which are years you could be productive. You were expected to be productive from 13 to 55 or so. So it represents ~25% of your lifetime wage to send ONE kid to school).

Even that 20-25% is assuming that everybody earns essentially the same, which is obviously not true. Let's say that you earn 50% less than what you would earn given that every job, president or cow herder, would give you the same amount of money. That makes the cost of sending one kid to university 50% of what you earn in a lifetime, give or take.

In other words : no university education anymore, except for the superrich.

Now in option 2 you might think that you'll be among the superrich. But we've had this situation in history many times, with limited money supplies. It can be summarized easily : it takes 30-50 years for the elite to shrink down to less than 1 in 100000 people, after which there is a revolution where all those rich are decapitated or worse, and we start over with a new set of rich. Are you really sure that when you take the 100000 people around you, that you are the best businessman/negotiator/... whatever makes one rich ? I can believe you can best 10 people, 100 if you're good, 0 if you're a geek. Best in 100000 ? I don't believe that.

Even if you do become part of the superrich, read some accounts of the french, russian, or various eastern european revolutions to read what happens to the rich after maybe a decade of luxury.

Also please keep in mind that the wealth debt slavery provides (the "value", the thing money's supposed to represent, but is not equivalent to) is vastly more than the value that is provided by mercantilist or feudal systems. The superrich in the bitcoin world will not have the standard of living that todays debt slaves enjoy, with one exception : their ability to hire others. Humans (and human life) will be cheap. A private tap with running water (not warm) requires being in the 1% richest. Computer access is effectively limited to 1000 people worldwide. Private computer access will be unheard of (fortunately, this will obviously destroy bitcoin).

Bitcoin represents a return to the monetary system of the dark ages. It may win, but that is not the outcome anyone wants to see, at all.

I'll take debt slavery, thank you very much. So will the rest of the 99%, and if you use bitcoin to drive it to the point where it takes killing anyone who own bitcoin to restore debt slavery, it is a matter of time until we call your bluff.

Of course, knowing human nature we'll pick option 2 and start killing eachother after a decade or so, and then a century later we'll resume the debt slavery thing and know a century of progress again.

  Everybody who today can't buy a house without a mortgage 
  will have NO WAY to buy a house

In the absence of this artificial demand, house prices come back down to much more reasonable levels. And you won't need to go in debt to buy a house (people had houses before mortgages existed, just like college used to be less expensive!). A sharp drop in housing prices is where the market was headed after 2008 until Bernanke started propping up prices with endless rounds of QE (literally endless, QE4 is to continue indefinitely.)

So: do you agree with the premise that housing prices will decline if Bernanke was not printing $1T/year ($85B/month) to buy mortgage backed securities? And if not, why not?

Do you agree that bitcoin massively disincentivizes spending anything but tiny amounts of currency ? Or at least, that it would have that effect if it was the only currency.