That shows why deflation is so scary. You can’t push on a string. If consumers think prices of everything will be lower next year, even interest rates of 0% can’t get them to borrow and spend today. They spent a huge amount of money on public works projects to spend themselves out of their recessions and all they did was boost their government debt to 176% of GDP (ours is about 65%).
No argument there. Hyperdeflation is scary stuff. But the “pushing on a string” analogy works for liquidity injections too. One of the criticisms of the economy before the ‘29 crash was that “easy” money will always find its way into the market one way or the other, pushing up equity prices into a bubble. In recent years we saw the dot.com bubble, then a real estate bubble, what’s next?