debt deflation
(en)
a theory that recessions and depressions are due to the overall level of debt rising in real value because of deflation, causing people to default on loans, which in turns causes bank insolvencies and thus a credit crunch, leading to further recession; developed by Irving Fisher following the Wall Street Crash of 1929
depressions do not in fact "right themselves" owing to a phenomenon called debt deflation. Simply put, as the economy deflates, debts increase as incomes shrink, making it harder to pay off debt the more the economy craters
notable
6 years, 4 months ago