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Yes and no. In the case of true deflation, interest rates can become negative, such that money in the future has more value than money today. In that case, the
by URSpider94 6y ago
Yes and no. In the case of true deflation, interest rates can become negative, such that money in the future has more value than money today. In that case, the value of this loan would diverge towards infinity.
- thaumasiotes 6y agoYou're making an unfounded assumption about the rate of time discounting.
- URSpider94 6y agoHelp me explain where my unfounded assumption is. If the interest rate is negative, that explicitly means that money in the future is worth more than money today. That's the definition of a negative interest rate.