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You buy the CD (and give the issuer your money on deposit against the rate of 3.5%)
by MikeDelta 4y ago
You buy the CD (and give the issuer your money on deposit against the rate of 3.5%)
- UncleEntity 4y agoWhich is the point of the article, you get 3.5% while the value of your money is -8.6% (or whatever the real rate of inflation is) so in the end you pay the bank to borrow your money.
- ethbr0 4y agoIf I follow the analogy right, the value of your debt is -8.6%. The path to beating inflation is (a) borrowing at fixed low rates before it kicks in & (b) buying some asset that appreciates at greater than inflation rates (or at least paces it).