Saturday, July 25, 2009

How does deflation increase the real cost of debt as described in Economist magazine?

It is a scenario theorized by the economist Irving Fisher. I don't understand how deflation "increases the real cost of debt." Can someone please explain?

How does deflation increase the real cost of debt as described in Economist magazine?
You would be repaying your debt with currency that has greater purchasing power than it did when you originally borrowed the money.

ginkgo

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