The incentive to hoard, also often called the &quot;deflationary spiral&quot;, is a theory proposed by neo-Keynesian economists, which doesn&#x27;t appear to be as bad as they say.<p>People have finite lifespan, and so, they want to use their hoards to better these finite lives, which leads them to spend. This preference, known as the &quot;time preference&quot;, strikes a balance with the tendency to hoard. It is impossible to predict where this balance is, though, because it&#x27;s subjective to each participant.<p>Why do you buy cell phones or laptops today, knowing that future ones will be better or cheaper? Why buy some food today, when you know your purchasing power will be greater next month? Why pay for housing when prices are falling, knowing your contract will be cheaper in five years?