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Old 02-11-2016, 11:05 PM
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Le Bernardin Le Bernardin is offline
Join Date: Jul 2013
Posts: 852

Originally Posted by Elinor Dashwood View Post
Wait, I'm confused. In a deflationary environment, if you put a $100 bill under your mattress, wouldn't it be worth $102 in a year in real terms?

Whereas if you lend it out and the guy repays you $99 at the end of the year, then that $99 would be worth 99 * 1.02 = $100.98 in real terms.

Or am I not thinking about this correctly?
Yes, it also means that it's better/easier to lay you off and hire a much cheaper replacement. The only people that deflation is good for, is for people that don't need a job or any income coming in to survive.

I thought this graphic did a pretty good job at simplifying it. Part 2 hasn't come out yet.
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