Re:Denmark's Jyske Bank lowers its negative rates on deposits
by Retric on Saturday September 21, 2019 @11:57AM
(#21036070)
The real issue in a deflationary situation loans effectively become more not less expensive vs 0 inflation situations.
Lending always carries the risk of not being paid back, where you can always just keep your own money. So, a 100$ loan needs to return the original 100$ + the risk + some incentive not to use this money for something else.
Thus loans are effectively the absolute value of (inflation or deflation rates) + a constant factor.
Lending always carries the risk of not being paid back, where you can always just keep your own money. So, a 100$ loan needs to return the original 100$ + the risk + some incentive not to use this money for something else.
Thus loans are effectively the absolute value of (inflation or deflation rates) + a constant factor.