3 ms·
Deflation is bad if you have debt. With inflation, the value of your debt is chipped away which makes taking on debt more attractive. In a deflationary environm
by coderenegade 4y ago
Deflation is bad if you have debt. With inflation, the value of your debt is chipped away which makes taking on debt more attractive. In a deflationary environment, your debt burden grows over time all else being equal.
- WalterBright 4y ago> Deflation is bad if you have debt And inflation is equally bad if you have cash or any assets denoted in cash. It's also bad because taxes don't necessarily index with inflation. For example, much of capital gains are illusory because of inflation, yet you get taxed on that inflated value, not the real value.
- coderenegade 4y agoAll true. But assets typically aren't paid for with cash, so if you want to keep that train rolling, inflation is probably necessary.