you are viewing a single comment's thread
view the rest of the comments
[โ€“] 12 points 3 years ago (9 children)

Exactly. And deflation incentivizes hoarding money. Inflation is bad but deflation can be worse. If no one spends money because you're literally making money by sitting in it the economy would crumble.

In a bad case the government would have to slash interest rates, maybe even slightly negative.

  • source
  • parent
  • hideshow 9 child comments
  • [โ€“] 4 points 3 years ago (7 children)

    You don't see high inflation and deflation much in the real world but you can easily observe it in online game economies when money is created out of nothing through grinding and the hoarding behaviour can depend a lot on what is available that is worth buying with that money.

  • source
  • parent
  • hideshow 7 child comments
  • [โ€“] 2 points 3 years ago (2 children)

    Better yet, look at crypto, where people believe inflation is all about monetary supply and restrict it on purpose. The result? Wild volitity, huge crashes, and low velocity of money because everyone hoards it instead of spending.

  • source
  • parent
  • hideshow 2 child comments
  • [โ€“] 1 point 3 years ago (1 child)

    I don't feel crypto is a good example because it is used by so many people as more of an investment and most spending was never really feasible due to high transaction costs and slow transactions.

  • source
  • parent
  • hideshow 1 child comment
  • [โ€“] 2 points 3 years ago (1 child)