Is deflation good for the People?  August is a time that new
economics students start as freshman and a new generation learns
that deflation is bad an inflation is good. Interesting enough
is that this understanding of inflation is relative new to the
vocabulary of the common people.  Many people say that inflation
helps an institution or person with a lot of debt. This however
is not always that case as the inflation component is included
in the interest that a debt holder pays over its principle loan.
Indirectly a borrower partially repays its loan in real terms by
just paying the interest.  Countries in general pay a lower real
interest (interest – inflation) compared to the average citizens
due to a lower perceived probability of non repayment. Inflation
however has the same impact for both an individual person as
well as for an institution. The above is true in case of monthly
adjusted interest rates. If however the inflation rate increases
but the interest payment (coupon) is fixed. The amount initially