Generally because it becomes a mass psychological issue. The issue of deflation entrenching itself is that you dont spend that 500$. You stick in under your pillow because it'll buy you more next week. But then, next week, it'll buy you even more stuff next month and even more next year.
This assumes that the folks getting this money can afford to sit on it, and don't have immediate needs that they need to use it on. I can see why Elon would stop spending (though I don't think he's got a lot of cash laying around) but your average family putting groceries on credit cards can't afford to sit on a windfall because it'll be worth more later. They HAVE to spend it because they need food/gas/medicine now.
Yep the marginal propensity to spend will vary but to kill deflation, you need to kill that mindset and its a difficult thing to do. Japan struggled with it for.decades because outside of immediate needs people will hold off. Hell even with immediate needs, if you know (or think you k ow) gas will be cheaper on friday than it is today you probably.only fill up what you need to gwt to and from work then buy they rest later.
Take a look at COVID stimulus payments as an example. They didn't spike inflation until much further down the road because people didn't really have much to spend on during lockdown and with travel and other restrictions in place.
I'd argue that COVID was a unique situation that doesn't really tell us about wider economic trends. I'd also argue that someone waiting until Friday to get gas, instead of gassing up on Wednesday isn't really an economic crisis. If we had a country full of affluent folks who could sit on cash and not spend it because of a hypothetical gain based on deflation, we probably wouldn't be having a lot of the conversations we are having now.
COVID is just one example of this. Other nations have experienced sticky deflation and had a beverage tough time combating it. The issue isn't the single person, its the trend. If everyone is delaying every purchase as long as possible it its a real problem. Wealth inequality is also a problem but a different one.
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u/AI_abuser 8h ago
Explain to me please why printing more money and giving it to people an masse (like stimulus checks during Covid) wouldn't help deflation.