I just used my new acquired AI skills to build an economic simulator!
Is deflation always bad for the economy?
I wasn't convinced either way, so I built an agent-based simulation with the pieces that actually matter: scarce money, rising productivity, trade, capital vs hoarding, and then the two channels everyone argues about: nominal debt (Fisher) and sticky wages (Keynes).
Result under default params:
Falling prices alone ≠ depression. Turn those rigid contracts off and deflation looks mostly like repricing.
Turn them on under a fixed money supply, and real output and survival get worse vs a price-level target (and vs the no-debt/no-sticky-wage ablation).
So the toxic combo isn't "Prices go down." It's "Prices go down while debts and wages don't."
I'm not claiming this proves the real world. It's a toy model. But it made my prior sharper:
Don't ask "is deflation good or bad?"
Ask "deflation with which contracts, and which monetary regime?"
If you are interested in playing with the model, I can send you...
#fixedsupply #bitcoin #deflation #inflation
