In Holy Fire, Bruce Sterling had young people unable to get their hands on "old money" and thus frozen out of many interesting parts of the economy.
I wonder if in reality we will have the reverse, where young people of the future refuse to live under bonds created in the past and old money just isn't worth anything.
>I wonder if in reality we will have the reverse, where young people of the future refuse to live under bonds created in the past and old money just isn't worth anything.
This is, in a nutshell, the basic populist argument in favor of inflation.
we were talking about bonds (or I guess annuities) in the previous message. Debt, essentially. If you owe money at a fixed interest rate, an increase in the rate of inflation helps you very directly, and hurts your creditors very directly, because you get to pay your debt back with cheaper dollars.
If you really expect your real-estate to exactly follow the CPI, I expect you will be disappointed. (or maybe excited... for the last two decades, at least, real-estate has massively outpaced inflation.)
Pensions, and really, most things are more complex, just 'cause there's usually something that attempts to compensate for inflation, but the point being that in general, inflation is good for debtors and bad for creditors. Most of the historical arguments in favor of inflation run along the lines of a partial repudiation of debt. Go read Bryan's "Cross of Gold" speech for an especially punchy example.
Whilst there are occasional examples where debt actually makes debt free or even negative value for the creditor, the examples are few and far between. Generally, you will read about such examples in the normal, non-financial press. That's how rare they are.
A mortgage's interest rate is designed to outpace inflation, so it almost always does.
Hmm? If you take out a fixed-rate 30 year mortgage that is pricing in inflation at two percent, and inflation moves to six percent several years later, you are in much better shape than you would be otherwise, as you get to pay back that loan with cheaper money.
If you buy a 10 year t bill expecting two percent inflation, and inflation goes up to six percent, you are going to be pretty disappointed.
I know that lately inflation has been hard to find... but it's pretty uncontroversial that these sorts of things happen when the rate of inflation changes.
Now, maybe you are saying that inflation, as long as it doesn't change doesn't matter, and while I still disagree, you have much stronger ground to argue from.
I wonder if in reality we will have the reverse, where young people of the future refuse to live under bonds created in the past and old money just isn't worth anything.