A deflationary asset is one in which the supply of the asset is decreasing.
A deflationary spiral is a situation in market where decreases in the price level of an asset lead to lower production, which consequently leads to lower demand, which leads to further decreases in the price level. These cycles can be extraordinarily destructive to economies. See the historical notes on gold standard and sound money for examples of systems which give rise to deflationary spirals.
See also inflationary asset.
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