[bb88]

Gentle inflation is what the fed targets. Out of control inflation is what you're talking about.

In an inflationary economy, people spend their money quickly, since it's worth less sitting around. In a deflationary economy people hoard cash because the value of cash just increases in the bank. Why invest in anything (companies, labor, capital investment) if your money just earns 10% in the bank?

If enough people do that jobs disappear, as they realize they don't need to market any new product or service to make their money.

FWIW, they call that period in Japan "The Lost Decade(s)" https://en.m.wikipedia.org/wiki/Lost_Decades_(Japan)

[dnautics]

Yeah I'm very familiar with it not the least because I'm of japanese extraction and have relatives my age living the lost generation: it's a lost generation because instead of letting crap companies/crap bosses die, due to fear of deflation, they bailed them out with monetary and fiscal stimuli, making working salaryman jobs meaningless for an entire generation of young Japanese people. What the fuck is the point of trying hard when your connected, incompetent competitor or your incompetent boss is going to get bailed out anyways?

[arcticbull]

The wage-price increase cycle is the kind of inflation the Fed attempts to control. Runaway inflation/hyperinflation is much more associated with a loss of faith in the government and a total systemic collapse.