Happy 400th birthday to the world's oldest bond

Re:Happy 400th birthday to the world's oldest bond by potato3732842 on Tuesday December 24, 2024 @07:15AM (#42501429)

>Why would expenses need to track less than inflation, if your wages are tracking with it?

Because wages don't go up in real time so you get robbed of the difference for the duration.

You make $3. Rent costs $1. You have $2 leftover to improve your life, pay down debt, whatever.

You make $3. Rent is now $1.50. You have $.50 leftover

Your wage goes up to $3.50. Rent is now $2. You have $.50 leftover.

Repeat a bunch of times.

Your wage goes up $.50 again. Rent stops rising in price. You have $1 leftover.

See how the inflation robs you of $.50 multiplied by the duration?

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Re:Happy 400th birthday to the world's oldest bond by chgs on Tuesday December 24, 2024 @12:10PM (#42503200)

You make $3, rent costs $1, you owe $300, it takes 150 to repay your debt

Inflation doubles everything

You make $6, rent costs $2, you owe $300, it takes 75 to repay debt

The person so wealthy they lent you money loses out, you gain.

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Re:Happy 400th birthday to the world's oldest bond by caseysoftware on Tuesday December 24, 2024 @01:06PM (#42503638)

If that's universally true, why would lenders lend in a high inflationary environment?

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Re:Happy 400th birthday to the world's oldest bond by UniverseHacker on Tuesday December 24, 2024 @03:41PM (#42504750)

The interest is usually still more than inflation, they just make less money- and the alternatives for them are either cash, which loses more, or investments that are higher risk and more volatile.

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Re:Happy 400th birthday to the world's oldest bond by chgs on Thursday December 26, 2024 @09:01AM (#42515189)

Because they lose more if they just stick it in a box under the bed.

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Re:Happy 400th birthday to the world's oldest bond by UniverseHacker on Tuesday December 24, 2024 @03:25PM (#42504655)

If you get an annual cost of living adjustment, presumably it is ahead of cost half the year and behind the other half which averages out. Rent usually updates annually also. If all other debt payments are effectively decreasing, you’re just doing better.

It only feels psychologically worse when you notice food prices going up steadily and you have slightly less left over than you did last month. People will still be mad about that even if actually ahead.

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