The feds desire to have about 2% inflation. That creates an incentive structure. It means that holding money is bad because its value is decreasing. That encourages everyone to invest their money which causes growth and thats good for everyone.
No inflation is bad. But deflation is worse. That means its better to hold your money rather than invest it. Businesses sell less stuff. They start letting people go. Then those people try to save their money. Its a self reinforcing problem. Its bad for everyone.
Exchange of goods and services is a crucial component of capitalism. It means that for all the things you offer (labor, money, goods), you are constantly exchanging those things to find a more efficient / more valuable place for those things to be. Maybe you have a car. You work from home. Your neighbor needs it more than you. So he is willing to pay a lot of money for the car so he can own it instead. You need money more than you need a car. He needs a car more than he needs that money. Now you are both making more efficient use of the resources you had. Everyone benefits.
It means that your money is moving around the country until it finds more and more efficient places to exist. If that slows down then quality of life standards for everyone decreases
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u/nebileyim_ben 9h ago edited 9h ago
its japans economic trap, worse than inflation.