A steep general decline in prices, often caused by a reduction in the money supply or credit, that creates economic recession or depression, which in turn results in greater deflation. A vicious circle, where the problem is its own cause.
A Deflationary Vortex occured in Japan during the 1990's, brought about by decreases in price that lead to lower production, which in turn lead to lower wages and demand, which lead to further decreases in price
by LizL June 29, 2010