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submitted 1 month ago by schizoidman@lemm.ee to c/world@lemmy.world

cross-posted from: https://lemm.ee/post/51182148

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[-] djsp@lemmy.world 4 points 1 month ago* (last edited 1 month ago)

China owns large parts of the debt of the US. Deflation makes them stronger.

I don't follow you here. How does deflation in China make the debt of the US stronger? Am I understanding you wrong?

If the renminbi appreciated over time against the US dollar, dollar-denominated debt held by the People's Republic would yield less and less, wouldn't it?

[-] wewbull@feddit.uk 1 points 4 weeks ago* (last edited 4 weeks ago)
  • Inflation makes the purchasing power of a dollar smaller
  • Deflation makes the purchasing power of a dollar larger

I owe you $100. Over time the value of that $100 debt goes down with price inflation. You charge me interest to make up for this fact and make some profit also.

If prices deflate the value of the $100 debt goes up, but you're still going to charge me interest. When I pay you back, not only can you buy more with the $100 than I could when I borrowed it, you've charged me for the privilege.

this post was submitted on 30 Dec 2024
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