This is probably a simple question but... Does inflation raise the real value of debt (other things being equal)? Please give me a short explanation too Helpful input will be rewarded with a positive rep, thanks!
Inflation stems the growth of debt, due to the fact that less people will be inclined to buy or spend. Inflation doesn't stimulate profit. Inflation's merely a tool to hinder consumer spending.. Hope this helped a little Good luck
Hmmm....But what about the real 'value' of the debt? Doesn't this question mean whether inflation affects the value of the debt in that: inflation increases the nominal wage slightly (not the real wage) and if that person is in a fixed debt, doesn't that mean paying off the debt is much less so it 'devalues' debt?? Not sure *shrugs* But thanks for the input
There's no value in debt, there's only value in profit. Debt is a burden on the consumer and on society as well. Debt doesn't value nominal wage Hope my input is helping
I'd say yes it does make the value of debt higher as with inflation comes fucking higher interest rates. Trust me.. my freakin mortgage seems to be more and freaking more Although the actual DEBT gets lower, the amount I pay into it gets higher, but the same amount is getting taken off of my debt. (Like the conversion from fuck to freaking? Oooh yea baby!) By the way.. This is just an opinionated answer. Nothing statistical/proven here.
I know this is a bit late but I still wanted to make things a bit clearer... When there is inflation, the cost of buying things increases. If I had debt of 500 dollars today, I could use that money to buy 500 pencils. However, if there was inflation in the future, the 500 dollars would not be able to buy 500 pencils anymore since the cost of the pencils has increased. Instead, the same 500 dollars would only be able to buy 450 pencils. The purchasing power of the 500 dollars has decreased with inflation. Thus, the real value of debt actually declines with inflation.