Quote from: kwhcoin on July 16, 2011, 01:08:13 PM

Quote from: Rassah on July 16, 2011, 05:46:50 AM

Quote from: kwhcoin on July 16, 2011, 04:04:31 AM

Quote from: Casper Hornstrup on July 15, 2011, 09:55:14 PM

I get weird numbers. Can you provide an Open Document Spreadsheet with an example?

I did the calculation with some real numbers and included the output of an excel spreadsheet.

Yep, I get the same numbers.
The only thing that still concerns me though is that the lender needs to get (1+i)*(1+d) return on his investment, yet this calculates each k outstanding balance to be paid off as just Bal*(1+i)...

In your example, the loan interest rate is 5% so the lender only needs to get 5% interest on the balance. It may end up "feeling" closer to 8% interest with respect to purchasing power (i.e. 5% interest plus 3% deflation), but the loan interest rate does not include deflation just like a typical 5% loan from a bank in dollars with 3% inflation is still just a loan for 5% even though the inflation makes it feel more like 2% with respect to purchasing power.

*facepalm* Of course. Deflation growth comes from holding the cash, not from the borrower paying it directly.