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well when you can fund giant capital expenditures with debt, you can buy up enough resources to build a company with current dollars, and pay for them with futu
by tensor_rank_0 9y ago
well when you can fund giant capital expenditures with debt, you can buy up enough resources to build a company with current dollars, and pay for them with future (inflated) dollars. from this perspective, inflation is basically a discount on the interest you pay on your loan. inflation is good for debtors. contrariwise, deflation is good for savers.
- colanderman 9y agoDeflation is good for savers if your savings is in terms of currency. Most people with "retirement" savings have them in a 401k, which isn't the greatest due to management fees, but at least it's roughly shielded from inflation.
- tensor_rank_0 9y agosavings is for more than just retirement. there are transaction costs associated with breaking into retirement vehicles in order to meet emergency obligations. more importantly, inflation discourages savings, because you have to invest your savings just to stay ahead of inflation. investment and savings are different categories, its financially unwise to conflate them.