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In this light, it's interesting as a counterpoint to look at inflation's systemic effects. After the 2008 real estate loan bust, many economists hoped for more
by HillaryBriss 9y ago
In this light, it's interesting as a counterpoint to look at inflation's systemic effects.
After the 2008 real estate loan bust, many economists hoped for more inflation so that the existing pool of loans would be a little more manageable for the debtors. (In Japan, they've been trying to increase inflation for decades). Even today, on financial news feeds and Bloomberg, when economic observers talk about "good news on inflation" they usually mean inflation going up, not down.
I guess, overall, there's a sweet spot for inflation. Or what's good for corporate profits and banks is sort of opposed to what's good for the overall collection of people in the economy.
- fwdpropaganda 9y ago> Even today, on financial news feeds and Bloomberg, when economic observers talk about "good news on inflation" they usually mean inflation going up, not down. Indeed, the sweet spot is believed to be 2%. It's good news because we've been under that for so long, not because the more the better. > After the 2008 real estate loan bust, many economists hoped for more inflation so that the existing pool of loans would be a little more manageable for the debtors. I'm not an expert, but I'll just point out that debt from a loan that you've put into a house probably doesn't have the same mechanics as debt from a company trying to fund its capital requirements. Not saying I agree or disagree with those economists, just pointing out maybe they're different.
- exHFguy2 9y agoRegarding business debt ---- > It is usually floating rate and has a shorter term. You will have to roll the debt more often as you refinance. Thus, you will pay the higher inflation costs. And if inflation costs are unpredictable, then lenders will require a higher risk premium on the inflation piece.