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Cake day: April 29th, 2025

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  • I think its because deflation is when the money supply is contracting and less debt is being created, so asset values begin to be valued at their actual value instead of their inflated nominal value, and people are no longer encouraged to attain the cantillon effect that drives up asset values.

    Which an inflated nominal value then causes more consumption via the wealth effect, and the misallocation of capital known as the business cycle, that requires bailouts via money printing in order to debase people on fixed income which provides riskier debt issuance and more innovation.