Suppose Bitcoin lenders (banks, creditors, investors) issue loans with interest. As the total supply of Bitcoins approaches the 21M ceiling, the total amount owed in outstanding interest will exceed the money supply.
This is the same as existing banks: they actually hold only a fractional reserve of funds, and the economy as a whole owes itself more money than there is in existence.
The difference is that reserve banks can print more money (yes, with inflation). Bitcoin can't.
An economy can continue to operate, I assume as long as there is enough circulation for a debtor to pay back his interest. However, since interest is compounded, it grows at an exponential rate: over time, wouldn't the total debts eventually outstrip the coins in circulation available to repay them?
Would Bitcoin find itself in a situation similar to the current global economic crisis? How would it correct itself?