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> My point was this is the wrong focus, because of what currency is by nature. Ah, fair enough. That said: > I owe way more money than I have in cash, as does
by a1369209993 5y ago
> My point was this is the wrong focus, because of what currency is by nature.
Ah, fair enough. That said:
> I owe way more money than I have in cash, as does almost everyone, and my loans being in nominal currency, inflation only helps.
This only works if you have a effective means of prohibiting (any) interest on those loans (ie anti-usury laws that actually have teeth). Otherwise the lender just bakes inflation into the interest.
- perl4ever 5y agoI don't know if you are American, but it's common here to have 30 year fixed rate mortgages. I gather that's rare most other places. So I'm supposing a typical scenario where a person borrowed or refinanced recently to lock in very low inflation expectations. That said, there are variable rate loans, but last year some lenders were actually offering such loans at a noticeable discount to prime (albeit with a floor that is above prime for now).
- a1369209993 5y ago> 30 year fixed rate mortgages. That helps a little, but relies on lenders underestimating future inflation. If they can predict X% inflation, they can price that into the initial fixed rate. So it's useful for making damages due to usury less variable - which is helpful for the same reasons insurance is helpful - but it doesn't usefully reduce them.
- perl4ever 5y ago>If they can predict X% inflation, they can price that into the initial fixed rate Yes, hypothetically, but they aren't, yet.