# Deflation, ugly (ugly deflation)

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- Post ID: 590931
- Modified: 2023-07-25T20:59:15+00:00
- Language: en

## Definition

A gradually intensifying bad deflation. - If - assets are worth less, - debts, on the other hand, have remained the same in nominal terms, i.e. valued at current prices, - then it is economically correct to put one's own balance sheet in order by reducing debts. - If, however, everyone simultaneously tries to bring their balance sheet into equilibrium by reducing debt or, in the case of private households, by increasing savings, the economy as a whole will collapse because no one will consume or invest any more. - If this self-reinforcing process is not stopped by economic policy, a "Great Depression" will result. - Fearing such a depression, the governments of almost all EU countries initiated measures in the course of 2008 and 2009 when, according to many experts, the euro zone was heading for a bad deflation. - See contagion effects, apple harvest close, deflation, good, deflation spiral, financial market stress, credit card fiasco, mark-to-model approach, ninja loans, pay-green initiative, rush to exit, shock, external, shocks, structural, stress test, subprime crisis, scenarios, exceptional, Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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