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Your debt is losing value at the rate of inflation, and you are paying less than the rate of inflation for that debt. If I'm paying 2.9% on -800k and that -800k
by carom 4y ago
Your debt is losing value at the rate of inflation, and you are paying less than the rate of inflation for that debt. If I'm paying 2.9% on -800k and that -800k is inflated away at 8.6% then I'm making 5.7%.
- chasd00 4y agoBut isn’t this assuming your pay increases at the rate of inflation? If your pay doesn’t increase then you don’t get any benefit of high inflation against your debt.
- carom 4y agoOr the asset you bought with that debt, as real estate has normally kept pace with inflation. Or stocks. Both might see temporary shocks though.