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 as well as this post and its discussion: https://steemit.com/steemhelp/@aem/steem-for-noobs.