• 19 Posts
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Joined 2 years ago
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Cake day: October 19th, 2023

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  • Your maths is not right. Inflation, in absolute terms, is a larger benefit to people with higher interest rates.

    Let’s consider the scenario where inflation is 10% for simplicity, and two borrowers who each borrow $100, but Borrower A at 5% annual simple interest and Borrower B at 25% annual simple interest. Both borrowers borrow the money at the beginning of Year 0.

    Borrower A owes $105 in Year 1 dollars at the beginning of Year 1. This is equivalent to $95.45 in Year 0 dollars.

    Borrower B owes $125 in Year 1 dollars at the beginning of Year 1. This is equivalent to $113.64 in Year 0 dollars.

    Compared to a 0% inflation rate, Borrower A saved 9.55 Year 0 dollars and Borrower B saved 11.36 Year 0 dollars. Borrower B saved 1.81 more Year 0 dollars than Borrower B due to inflation (but paid 17.55 Year 0 dollars more overall because of interest).





  • The Republicans tried doing a similar thing to the Democratic Party by calling it the “Democrat Party”, but members of the Democratic Party basically just ignored this and treated those who used it as stupid, or offered “helpful corrections” to the user’s “inadvertent mistake”. Eventually, it lost currency because it failed in its goal of upsetting people.