> Deflation favors debt payors instead of debt issuers/servicers
Wouldn't that be the other way around?
If I take out a $30K loan to buy a new car, and I'm paying $500/month, then if the economy happens to go through an extreme amount of deflation a year later and now brand new cars are only $10K, then as the payer, I'm still paying $500/month and $30K total, except that amount is worth a lot more.
Whereas if massive inflation happens, the payer gets a huge benefit, assuming their salary keeps up with the inflation.
I think you are correct and GP has the right idea for wrong reasons. In the long term people will stop borrowing in a deflating economy which will harm debt servicers. Financial institutions collapse when your mattress is better place than a bank for money.
Wouldn't that be the other way around?
If I take out a $30K loan to buy a new car, and I'm paying $500/month, then if the economy happens to go through an extreme amount of deflation a year later and now brand new cars are only $10K, then as the payer, I'm still paying $500/month and $30K total, except that amount is worth a lot more.
Whereas if massive inflation happens, the payer gets a huge benefit, assuming their salary keeps up with the inflation.