The Case for Miner Controlled Emissions

Where do I begin…

To put it simply, you are conflating the “market” with a Nash equilibrium. The Nash equilibrium, if we choose all favorable assumptions, could very well be that loyal miners keep the inflation down to a minimum, or at a constant rate. A big factor–miners don’t want to keep adjusting the inflation rate based on changing theories. It will be an equilibrium based on convenience. However, the market of miners will likely just mine the coin when it is profitable and leave when it is not–not caring at all what the rate of inflation is set to (again, some constant very likely). Miners can also simply move to a different coin with a better PoW inflation model. Further, if you think the “market” should decide, why cap the rate of change? That sounds like centralized fixing of the market–read, “it is.”

You are also ignoring volume. That is the biggest reason for having inflation. As you say, on the current path, Bitcoin will run into problems with adoption as it turns into more and more of pyramid scheme. It is a healthy scheme right now because it is very liquid compared to all other coins in existence. That dominance in liquidity could last for decades. The solution for when mining contributes less to liquidity and price discovery? People fragment and migrate to the other more liquid alt-coins regardless of their long-term inflation model. In other words, liquidity is something you have to prove now. It can’t be “promise us, it will be more liquid than all the other coins at some point in the future.”

In the end, Bitcoin already has an “MCE” model. The miners simply choose to keep the issuance model as it currently is. There is nothing that says it can’t be forked in the future. If it is such a slam-dunk idea, it will be adopted. If it isn’t Bitcoin, it could be any of the top 10, 20 mining coins, which all currently have asymptotic supply caps or set tail emissions.