Generally because it becomes a mass psychological issue. The issue of deflation entrenching itself is that you dont spend that 500$. You stick in under your pillow because it'll buy you more next week. But then, next week, it'll buy you even more stuff next month and even more next year.
This assumes that the folks getting this money can afford to sit on it, and don't have immediate needs that they need to use it on. I can see why Elon would stop spending (though I don't think he's got a lot of cash laying around) but your average family putting groceries on credit cards can't afford to sit on a windfall because it'll be worth more later. They HAVE to spend it because they need food/gas/medicine now.
Those who have immediate needs will spend the money and pass it on to those who can wait. They will be only intermediaries whose spending changes nothing.
Which, to me, is why a wealth tax makes sense. If you're sitting on a sum of money larger than you'd ever need in your lifetime, simply because it'll be worth more a bit later, perhaps it's time to create incentives not to sit on wealth.
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u/GWsublime 7h ago
Generally because it becomes a mass psychological issue. The issue of deflation entrenching itself is that you dont spend that 500$. 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.