I'm doing more research into it myself. But can't really give you an example of where deflation ruined an economy. On your second point however: >The idea that no one would spend money seems odd because people have needs that need to be met by the economy It's not the people you need to consider, they'll spend a few billion at most on necessities. It's the extremely rich. Right now, if they just hold on to their money, they're losing it, so they invest it (at risk) which can be thought of as loans that help drive the economy. If currency was deflating it wouldn't make sense to invest their money at risk when they could just hold onto it, and it would grow in value anyway. But then again, gold is deflating every year with respect to currency, so if someone wanted to go that route, it's already open to them: just convert all your money to gold, and sit on it. Yes, more research is needed to figure this out.