And AMEX has been giving large sign-up bonuses on Hilton cards for many years. Not to mention that, the larger the bonuses, the higher the breakage, which means a significant number of those bonus points will never be used.

In any event, not sure why the purported economic geniuses here seem to believe that increased points float somehow justifies a no-notice devaluation. That is a complete non sequitur.

Finally, since this is not an open market, but rather one in which Hilton and the properties exercise exclusive control over inventory and pricing, the analogy to currency devaluation in an open market is completely inapt. Hilton certainly can keep prices unchanged. The result would be more points competing for the same number of rooms, i.e., it would be harder to redeem for the desirable properties. This is an inherent characteristic of a market in which prices are fixed. An award chart is by definition price fixing, and it can be expected to throw the demand curve out of whack, since prices are set by Hilton, not the market.