>The dollar valued against itself a year earlier, and a year in the future. That is the interest rate or yield of the asset if held. It should go up, but right now it goes down.
It depends.
Positive real interest rates do not necessarily mean deflation, and deflation isn't necessarily a bad thing.
As an example, you could give a loan for $1 to someone for 5% interest.
In a year they pay you back, so now you have $1.05.
That dollar could get you exactly the same amount (of real goods or services that you personally want) as last year, or it could get you more, or it could get you less.
Inflation and deflation typically refer to the price of a basket of intrinsically valuable goods and services.
That is separate from the interest rate which is just what you, the creditor, and the debtor shake hands over.
If the dollar gets you the same basket as last year, then you are net better off because now you can buy the basket and you have $0.05 for lending to someone who was able to pay you back.
The missing variable here is the productivity of the rest of the economy, if the economy is growing, then you can see a decrease in dollars per basket (deflation), but that's not necessarily a bad thing.
The interest rate is sort of like a best guess for the productivity of the debtor.
You’re saying there should be deflation?