High school economy classes are taught that inflation means it's always good to pay today's debts with tomorrow's devalued money so loans are cool and good. In an economic crisis this is doubly true because rapid inflation essentially wipes out all debt. Did my teacher and economics books lie to me?
Long term debt like mortgages are generally tied to the central bank cash rate, which is in turn tied to inflation. Theoreticaly, if theres massive inflation then your interest rates go up and wipe out any advantage you might have had.
For short term fixed rate debt, it could possibly be true. If you got a 1 year long car loan fixed at 8% and inflation jumps from 3% to 10% then you've essentially saved money. This is, of course, assuming that your pay also rose 10% to match inflation, which in this day and age...
High school economy classes are taught that inflation means it's always good to pay today's debts with tomorrow's devalued money so loans are cool and good. In an economic crisis this is doubly true because rapid inflation essentially wipes out all debt. Did my teacher and economics books lie to me?
this is why the fed's monetary policy is entirely focused on keeping inflation down, to protect creditors
Idk, I'm just saying lots of people lost their homes and I'm nooot fucking falling for it lol
Depends on what the terms of the debt are.
Long term debt like mortgages are generally tied to the central bank cash rate, which is in turn tied to inflation. Theoreticaly, if theres massive inflation then your interest rates go up and wipe out any advantage you might have had.
For short term fixed rate debt, it could possibly be true. If you got a 1 year long car loan fixed at 8% and inflation jumps from 3% to 10% then you've essentially saved money. This is, of course, assuming that your pay also rose 10% to match inflation, which in this day and age...