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I feel like this is circling around the Gordon Gekko “greed is good” speech?

Many examples in game theory where everyone making their personally-right decisions (Nash Equilibrium, Prisoner’s Dilemma) does not result in the societally maximizing result. Coordination, collective decision-making, nudges, or better game rules can improve outcomes above what individuals could get

As another commenter notes, there are lots of examples of this. I just want to add: one reason we have governments is to step in in such cases. In this case, by doing the spending individuals can’t afford to. In other cases (e.g., pollution, which is sometimes rational for individual firms, but …

yes. capitalism contains many contradictions

(It's More Complicated Than This, but I think this is the rough intuition that will be useful for non-economists)

Also "your money is worth more tomorrow than today, and that also applies to your student debt, credit card debt, and mortgage"

As an extension, it's effectively a ladder pull for those who already have money and further stratifies the economy. So if you are a type who cares about that sort of thing, as most of us are On Here, you should really want to avoid deflation

Yeah but what if only MY money is worth more tomorrow and everyone else’s spending stays the same, we could just do that, right?

I don’t think this has met with the modern American slopsumer though. The USA would keep spending no matter what.

Is the "spiral" part roughly: - A business then says: "wow, nobody is spending money, I better offer a 5% discount on my goods to entice them to spend money today" - The dollar continues to degrade in value - People save more money - The business says: wow, nobody is spending money, I better...

But wouldn’t this be self correcting once prices do start going down? Anecdotally, I hold off on buying things until they go on sale, save my money, and then I buy those things on sale. Doesn’t this model require people to assume that deflation will continue forever?

Sorry honey we can't buy food and clothes money is gonna be worth more tomorrow.

Human impatience and pure physical necessity cap how long anyone can delay a purchase. the opportunity cost of waiting eats your utility alive.

TBF, that's generally been true for like 100 years, but victorian England had deflation and increasing GDP. I don't subscribe to like, AI maximalism or free energy utopia, but it's not completely out of the realm of possibility we could go to a kind of similar paradigm.

Questionable armchair psychological microfoundation IMO. Better: I’m going to buy more stuff even though I don’t spend more money. This causes firms to produce more stuff, hire more staff, and spend more on building productive capacity, invest. (This just one effect of deflation of course.)

The US should just release a new dollar at a 1:10 ratio and I’m reasonably convinced most people would see it as ”deflation” in the way they think it works which is just nominal prices being lower.

Keynes is somewhere weeping at this post.

vibes, you might say

Someone elsewhere in the thread pointed out that, at the very least, humans need to eat and have shelter so they'll still be spending SOME money on food and shelter upkeep (rent, property taxes, etc.), so money is still changing hands

Larger entities are able to save more since individuals and households still need to spend on mandatory items like food and shelter but household spending drops as well.

It’s both. But corporations stop all capex, which is a big lever