Pure Economics INFLATION / DEFLATION .. which is more better ..

TEAMBRINGIT

# ECONOMICS
Inflation in India has fallen from 10 per cent to 5.5 per cent."

And this is how RBI governor explains advantage of lower inflation. Funny but true.
    "Say the pensioner wants to buy dosas and at the beginning of the period, they cost Rs. 50 per dosa. Let us say he has savings of Rs. 1,00,000. He could buy 2,000 dosas with the money today, but he wants more by investing.
    At 10 per cent interest, he gets Rs. 10,000 after one year plus his principal. With dosas having gone up by 10 per cent to Rs. 55, he can buy 182 dosas approximately with the Rs. 10,000 interest.
    At 8 per cent interest, he gets Rs. 8,000. With dosas having gone up by 5.5 per cent, each dosa costs Rs. 52.75, so he can now buy only 152 dosas approximately. So the pensioner seems vindicated: with lower interest payments, he can now buy less.

    But wait a minute. Remember, he gets his principal back also and that too has to be adjusted for inflation. In the high inflation period, the balance at the end of first year was worth 1,818 dosas (1,00,000/55), in the low inflation period, it is worth 1,896 dosas (1,00,000/52.5). So in the high inflation period, principal plus interest are worth 2,000 dosas together (1818+182), while in the low inflation period it is worth 2,048 dosas (1896+152). He is about 2.5 per cent better off in the low inflation period in terms of dosas".
# DOSA THEORY
#Very true
#JUSTBRINGIT 🇺🇸