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Is Deflation Both Good and Bad at The Same Time? episode artwork

May 17, 2020 30 min

Is Deflation Both Good and Bad at The Same Time?

from Broken Pie Chart Hosted by Broken Pie Chart

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

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