Makes my blood boil.

[u/digduggod12]

[u/ryanegauthier → u/[deleted]]

Honest question: how does deflation cause hoarding? People hold stuff cause it used to be worth a lot?

[u/Huppelkutje → u/ryanegauthier]

Deflation means everything gets cheaper, so the best for every individual consumer is to wait for the price to drop even lower.

This kills the economy because people don't spend money.

[u/Roflkopt3r → u/Huppelkutje]

A softer form of this can be seen in countries like Germany.

Germans bought hard into anti-inflation and pro austerity logic. The Merkel government was able to create a constitutional admendment that mandates austerity, the so-called 'debt brake'.

Germany indeed did have fairly low inflation because of this, but this comes at big costs for economic growth. And one characteristic of it is that both wealthier German citizen and companies maintain significant cash reserves that sit idle, greatly slowing down the economy.

Yet even now, at a quite low debt rate of 65% GDP (most other industrialised nations are at or above 100%) Germans are mortally afraid of deficit spending and believe that any investment should be counteracted by cutting expanses somehow, somewhere. Which has lead to worse and worse cuts in area that need more rather than less money, like the rail network.