Re: Is deflation truly that bad for an economy?

If there is deflation, people will tend to hoard the money they have since the "value" of currency will increase in the coming future. This will reduce the demand of the goods drastically.

This is yet another common misconception based on nothing but intuitive (mis)understanding. When you buy a car, it starts depreciating right after you begin driving it (in fact, it would depreciate even if you didn't drive it at all). According to your reasoning, people wouldn't buy cars and other quickly depreciating things they can happily live without.

Deflation can actually postpone consumption, but this effect will be temporary and short-lived.

Deflation is not the same as depreciation. Deflation is a decrease in the general price level. Depreciation is the consumption of capital.

You seem to be writing just for the sake of writing and having your word heard. What exactly do you disagree with me on? I never said that deflation is the same as depreciation, I was trying to explain the psychological motives behind human behavior, why people will still spend under deflation.

They may continue to spend during deflation, but they spend at lower rates evidenced by the drops in velocity.

Deflation and depreciation cannot be related. Since depreciation is consumption of capital, yet deflation is an increase of the general price level without any consumption, there is no way to relate them sensibly.

Just in case, deflation is a decrease in general price level. Depreciation means a decrease in value (just like deflation a decrease in price), what you refer to here is a narrow definition from accounting (but this is still the same concept of losing value). I think I explained it pretty well to repeat myself in respect to psychological aspects being effectively the same for both deflation and depreciation.

tee-rex, you're wrong buddy. Deflation does increase hoarding and lack of incentive to spend money. As others have said, deflation alone is bad for an economy. Also depreciation is not the same as Deflation....where are you getting this stuff from?