deflationary
Characterized by or causing a contraction in the circulating money supply, or a sustained decrease in general price levels.
In tokenomics, describes protocols where token burning or capped total supply reduces circulating units over time, increasing relative scarcity.
Word relationships
- contractionary: Contractionary refers broadly to shrinking economic activity or policy, while deflationary specifically highlights falling price levels or shrinking money supply.
- inflationary: Inflationary describes policies or assets that increase circulating supply, diluting purchasing power over time.
Commonly confused with
- disinflationary: Disinflationary means prices are still rising but at a slower pace; deflationary means prices or money supply are actively shrinking.
Word family
- deflation (noun): A reduction of the general level of prices or money supply.
- deflate (verb): To reduce in size, volume, or supply.
Collocations
- deflationary spiral
- deflationary asset
- deflationary pressure
- deflationary tokenomics
Idioms & expressions
- shrinking pie
- tightening the belt
Example sentences
- "A deflationary spiral can paralyze economic growth when consumers delay purchases in anticipation of even lower prices tomorrow." Monetary Economics
- "By burning a percentage of transaction fees, the protocol implemented a deflationary mechanism that reduced token supply under high usage." Tokenomics Design
- "Central bankers feared that lingering deflationary forces would increase the real burden of outstanding national debt." Central Bank Policy
Memory hook
DE-FLATE = Letting the air OUT of the money supply balloon. Shrinking supply, letting out the air.
When not to use
Do not confuse with 'disinflationary', which means inflation is occurring at a slower rate, whereas deflationary means the supply is actively shrinking.
Fun facts
- Bitcoin's hard cap of 21 million coins combined with halving events creates a programmatically deflationary supply model relative to expanding fiat currencies.
Related words
Explore more words
Deflation, inflationary, Inflation, Devaluation, Contraction, predatory
Also appears in
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