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this post was submitted on 22 Jul 2023
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Asklemmy
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You don't see high inflation and deflation much in the real world but you can easily observe it in online game economies when money is created out of nothing through grinding and the hoarding behaviour can depend a lot on what is available that is worth buying with that money.
Better yet, look at crypto, where people believe inflation is all about monetary supply and restrict it on purpose. The result? Wild volitity, huge crashes, and low velocity of money because everyone hoards it instead of spending.
I don't feel crypto is a good example because it is used by so many people as more of an investment and most spending was never really feasible due to high transaction costs and slow transactions.
It's what happens when people treat money as an investment and don't spend it. Money that's useful as money would be a bad investment.