Re:A Black Hole Engulfing the World's Bond Markets
by lotsofpulp on Sunday July 28, 2019 @02:30PM
(#20549069)
Consumption and investment are the same thing in a generalized model when comparing returns and figuring out how much interest to charge to keep up with inflation.
Re:A Black Hole Engulfing the World's Bond Markets
by pas on Monday July 29, 2019 @07:09PM
(#20560440)
But those two possible uses of money have different profiles. You would have to price in how much it is worth to you to use the car vs the bus, subtract the amortization of the car - and together that's the target rate/yield that you should ask for your money plus risk of default.
I don't think that's the only source of time value of money.
For example, I'm fairly certain I can buy a car for the same price a year from now, but I am willing to pay a huge premium to have the car now so I don't have to ride the bus for two hours a day while I save up the cash to pay for it.
That is a preference for present consumption over future consumption that has nothing to do with inflation.