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If the loan is indexed to inflation, "nothing" would happen. The remaining loan payments would simply increase. … If the loan is not indexed to inflation, when inflation occurs, the debtor's wage would most likely increase with the inflation rate. …

Assuming that we had average inflation of 5 percentage points (pulling numbers from my head just for the example), the value of the currency decreased around 11.5 times (not real number) during that interval … Had the inflation over the period been higher, your real debt would be even smaller. The other way around: if there was deflation over that period, your real burden would be higher! …

It should also distinguish between expected inflation and surprises. I'm not going to do any of this, but giving you three reasons for a desirable positive level of inflation. … Unexpected inflation is similar to redistribution from creditors to borrowers, as long as debt contracts are not indexed to inflation. …

First, there are direct negative effects from inflation, known as the shoe leather cost and menu costs of inflation. … These are usually small, but typically higher given higher inflation rates. …

To see the issue: Imagine high inflation at $t-5$, and low growth at $t$. Using a standard timing assumption, the former caused the latter. However, we like to think about agents as forward looking. …

I have answered few reasons for and again higher inflation here. These make a case for a positive inflation rate. However importantly, they make a case for positive unexpected inflation rate. … If high inflation is expected, all these benefits fall down. What remains is the shoe-leather-cost of inflation, implying that the lower inflation rate, bit coin, would be weakly better. …

It is a fallacy to conclude that a steady number of coins will give you no change on the monetary value (inflation/deflation). …