> An economy built on the idea of incentivizing people to not spend any money is not good at all. It's better not to induce anyone to over-spend or under-spend

> An economy built on the idea of incentivizing people to not spend any money is not good at all. It's better not to induce anyone to over-spend or under-spend. I would not advocate a deliberately deflationary monetary policy any more than I would advocate a deliberately inflationary one. The supply should remain as constant as possible so as to avoid injecting noise into a very important economic signaling mechanism regarding the dividing line between socially beneficial investment (above-average returns) and malinvestment (below-average returns). Between the two, though, IMHO it's better to err on the side of deflation. It's easier to correct for underconsumption or underinvestment (just start spending or investing more) vs. getting back resources which have already been wasted on unproductive excess consumption or malinvestment. When you inflate the money supply in an attempt to drive people to consume more than they need or else invest in ventures that may or may not actually make a positive contribution to the average rate of return just to avoid being penalized for holding cash you're actively contributing to the destruction of wealth and making everyone collectively worse off. (Though of course not everyone is worse off; those individuals closest to the supply of new money benefit disproportionately from receiving it at pre-inflated rates before it becomes diluted throughout the economy.) "Deflationary spirals" are a well-known economic myth. There is no general correlation between monetary deflation and a shrinking economy, much less a self-destructive feedback loop. Gradual, unforced deflation does not significantly affect the demand for goods—people still need things now, they can't just wait forever for prices to improve—and while nominal wages do obviously decrease over time, nominal prices of consumer goods tend to decrease even faster, resulting in an increase in purchasing power. As opposed to the situation with money supply inflation, where prices tend to rise faster than wages.