High interest rates and inflation hurt people with money and help people with debt. As interest rates rise, the value of assets decreases. The inverse relationship is strong and well tested. Debt, on the other hand, loses value with inflation. Inflation paid off 20% of my mortgage over the last few years.
No one likes high inflation. It’s definitely not a scheme to transfer wealth. That’s the status quo with 2% inflation and cheap debt for the wealthy to use.
It’s crazy how brainwashed people are. High interest rates are excellent for regular people except those carrying credit card debt. But people think the fed is somehow harming them.
High interest rates and inflation hurt people with money and help people with debt. As interest rates rise, the value of assets decreases. The inverse relationship is strong and well tested. Debt, on the other hand, loses value with inflation. Inflation paid off 20% of my mortgage over the last few years.
No one likes high inflation. It’s definitely not a scheme to transfer wealth. That’s the status quo with 2% inflation and cheap debt for the wealthy to use.
Lol what?
Inflation allows borrowers to pay lenders back with money worth less than when it was originally borrowed.
Inflation is in fact a massive transfer wealth from the lenders to the borrowers, measure in trillions.
Econ 101
https://www.khanacademy.org/economics-finance-domain/ap-macroeconomics/economic-iondicators-and-the-business-cycle/costs-of-inflation/a/lesson-summary-the-costs-of-inflation
https://www.investopedia.com/ask/answers/111414/does-inflation-favor-lenders-or-borrowers.asp
https://www.marketwatch.com/story/why-inflation-could-create-a-giant-wealth-transfer-from-lenders-to-borrowers-11623876205
I’m not saying runaway inflation is generally good. It’s not, especially if ongoing for long. I’m just talking about lenders and borrower.
The impact of interest rates is a lot less cut and dry.
It’s crazy how brainwashed people are. High interest rates are excellent for regular people except those carrying credit card debt. But people think the fed is somehow harming them.