TheOtherDave comments on Firewalling the Optimal from the Rational - Less Wrong
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FWIW, I understood "X deflates to Y" in this context to mean something like "most of the time when people say X, their beliefs about the world are such that if their goal was to express those beliefs maximally accurately they should instead say Y."
I also expect that Eliezer would say that the bundle of computation to which "should" properly refers includes but is not limited to what "rational" refers to, but I don't think that's relevant to what we're looking at here.