Education·23 April 2026·5 min read
What is deflation — when prices fall (and why it's dangerous)
It sounds good for things to get cheaper. But prolonged deflation can freeze an entire economy.
Deflation is the opposite of inflation: prices fall over time. It sounds good, but if people believe tomorrow will be cheaper, they postpone purchases — and the economy grinds to a halt.
The dangerous spiral
Fewer purchases mean fewer sales, layoffs, and even less money to spend — a downward spiral. The Great Depression of the 1930s was also a deflation crisis.
Both too much and too little harm. The health of money lies in balance.
