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Yes that would explain them being rich. But I'm sure you have heard the phrase "Past performance is no guarantee of future results." What I am talking about h
by travisoneill1 8y ago
Yes that would explain them being rich. But I'm sure you have heard the phrase "Past performance is no guarantee of future results."
What I am talking about here is debt. Owe money on your house? Inflation makes you owe less. Lend money to someone buying a house? Inflation means you get paid back less.
- rabidrat 8y agoIt's only "less" if your wages also inflate. But your food and housing prices increase on the leading edge of inflation, and wages lag. And often they never catch up.
- chimeracoder 8y ago> It's only "less" if your wages also inflate. But your food and housing prices increase on the leading edge of inflation, and wages lag. And often they never catch up. Except that's not true. If you're a debtor, the effects of inflation decreasing your debt in real dollars is orders of magnitude more consequential than the increase in your expenses, and that's even assuming your wages don't increase (which is generally not true either).
- betterunix2 8y agoInflation is typically priced into loans in the form of higher interest rates; this is why bond prices fall (i.e. yields rise) when the inflation rate increases (or more precisely, when people believe inflation will be higher in the future). Also priced in is the uncertainty about future inflation, which is one reason why central banks work to maintain a stable rate of inflation.