The first expression is used in reference to the behavior of individuals during a period of hyperinflation, while the second is used to illustrate the behavior of agents during a period of deflation.
In the first case, prices rise so quickly (sometimes almost doubling in a single day) that it is said that money « burns in your hands, » as everyone rushes to spend it before prices rise and its purchasing power erodes.
In the second case, prices do not rise but fall (deflation). The opposite therefore occurs: individuals are reluctant to spend their money, since the goods they buy will be cheaper tomorrow. We therefore say that money « sticks to the hands. » This situation can be formidable in that such behavior can freeze the economy: what is the point of producing in such a context, what is the point of consuming?
Deflation, which has characterized the Japanese economy in particular for more than a decade, is an « economic equilibrium » that central banks in developed countries are currently keen to avoid.
Julien P.
