Deflation

Money that gets stronger every year sounds like a gift. It behaves like a trap.

If the sofa will be cheaper in six months, you wait. Everyone waits. Shops sell less, so they cut prices harder, so waiting looks even smarter. Demand keeps falling behind.

At the same time every existing debt gets heavier. The number you owe stays fixed while the money needed to repay it becomes harder to earn — which squeezes households, firms and governments simultaneously.

Japan lived a version of this for well over a decade, which is a large part of why almost every central bank now aims for a small positive rate — typically 2% — rather than zero. The reasoning is not that inflation is good; it is that a slow predictable melt is considered safer than the risk of a freeze.