Watching the financial news, we have been seeing some people make predictions of a deflationary period. At the same time others point to growing debt levels and Federal Reserve money printing as precursors to inflation. But what if deflation could be both good at the same time? Falling prices can happen by technological innovations or falling demand. One is better than the other. But for indebted countries, individuals, and companies' deflation can increase the real value of debt. That is potentially bad!

What is deflation?

What is inflation?

Formula to inflation adjust prices using CPI Index

Examples of how deflation raises the real value of debt

How inflation can deflate the value of debt

Massive inflation in textbooks but deflation in the price of TVs.

Demand falling off can hurt margins and equal bad deflation

Adjusting the price of a 10-minute-long distance call from 1982 to 2020 dollars.

Deflation doesn't mean consumers will always put off purchases to later day

Mentioned in this Episode:

Chart showing various inflation or deflation in consumer goods 1997-2017 https://s.marketwatch.com/public/resources/images/MW-GD574_CPICha_NS_20180212131601.png

CPI Index https://fred.stlouisfed.org/series/CPIAUCSL

What are Zombie Companies https://podcasts.apple.com/us/podcast/what-are-zombie-companies/id1432836154?i=1000473428395

Payoff mortgage early or invest periodically https://podcasts.apple.com/us/podcast/should-i-payoff-my-mortgage-early-or-invest/id1432836154?i=1000467130109

Inflation erodes purchasing power of US Dollar https://podcasts.apple.com/us/podcast/how-purchasing-power-dollar-is-eroding-plus-why-inflation/id1432836154?i=1000433222599

Contact Derek www.razorwealth.com

Derek Moore's book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr