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