Funny meme but also inflation is bad
This is true
Not necessarily, if you own a home AND your pay slowly goes up to compensate (both of these unfortunately aren’t happening for a lot of people), relative to your income your mortgage goes down.
Or in more generic terms, inflation is good if you borrow money.
Or in more generic terms, inflation is good if you borrow money.
If your interest is less than inflation.
Like my colleague who bought a house for about 1.5% before inflation nearly went to 10. Man.
Biggest reason why I started paying an extra 1k for housing per month… In 5 years, my crappy “luxury” apartment will cost more per month than my house. In 10 years, people will think it’s insane how cheap my house is per month.
Or the country could collapse and my property will be worthless, but at that point I got bigger problems.
You are better off regardless of how much your interest rate is, as long as it is fixed. If your mortgage payments are fixed, but your pay increases with inflation, your real monthly mortgage payment goes down over time.
Eg, if your mortgage is $1000/mo, but at the end of this year a cheeseburger costs $1000, then your mortgage payment is the same cost as a cheeseburger. Doesn’t matter if the interest rate you got originally was 1% or 99%.
If your mortgage payments are fixed, but your pay increases with inflation, your real monthly mortgage payment goes down over time.
That if is doing so much heavy lifting it just qualified for the Olympics. The problem with inflation is that your wages don’t keep up with it.
Inflation reduces the real buying power of the money used to repay the loan by the inflation rate each year, regardless of your loan interest.
In absolute terms, inflation is better the higher your interest rate is, because the number of dollars it saves you goes up.
What does that mean? Where I live you borrow a certain amount of money and you pay it back plus interest (in my case 3.5%), and that percentage is fixed for 20 years. In 20 years I expect to have paid most of that entire amount back and my house should be mortgage free
Yeah. He borrowed money for a house at 1.5%. Then inflation hit almost 10 during covid and our salary didn’t fully cover this but was raised way more than 1.5%. Money lost value much faster than his debt increased, so the banks effectively lose money on him while his paycheck grows faster than his debt increases.
inflation is good if you borrow money
at below the rate of inflation
Inflation going to 2% to 6% when you’ve got a credit card with a 30% APY is of very marginal benefit.
Your maths is not right. Inflation, in absolute terms, is a larger benefit to people with higher interest rates.
Let’s consider the scenario where inflation is 10% for simplicity, and two borrowers who each borrow $100, but Borrower A at 5% annual simple interest and Borrower B at 25% annual simple interest. Both borrowers borrow the money at the beginning of Year 0.
Borrower A owes $105 in Year 1 dollars at the beginning of Year 1. This is equivalent to $95.45 in Year 0 dollars.
Borrower B owes $125 in Year 1 dollars at the beginning of Year 1. This is equivalent to $113.64 in Year 0 dollars.
Compared to a 0% inflation rate, Borrower A saved 9.55 Year 0 dollars and Borrower B saved 11.36 Year 0 dollars. Borrower B saved 1.81 more Year 0 dollars than Borrower B due to inflation (but paid 17.55 Year 0 dollars more overall because of interest).
Actually its the inverse. Borrower A is borrowing the equivalent of $105 and borrower B is borrowing the equivalent of $125 and after 5 years the amount they borrowed is equivalent to $160.
Let’s put this into more real terms. Lets say 30 years ago borrower C got a $100k mortgage at a 6% interest rate. Ignoring everything else that often gets lumped into “the house payment” (insurance, property taxes, HOA/condo association fees, closing fees, etc.) their monthly mortgage payment would be $599.55 for the entire lifetime of that mortgage. That $100k in 1995 dollars that was borrowed would be about $210k when adjusted for inflation. Those 360 payments would also conveniently equal out to roughly $215k meaning they effectively were loaned the money for free over the timescale, and that loan payment of $600 in 1995 is still a loan payment of $600 in 2025 despite the fact that that $600 in 1995 dollars is equivalent to about $1200 today.
Basically with inflation, property ownership ensures a roughly decreasing cost of living over a lifetime and property has a tendency to gain value faster than a dollar does, so ultimately being able to get a mortgage creates wealth for the individual by stabilizing costs that would otherwise grow indefinitely and they gain an asset that generally increases in value.
I’m a bit confused by what you’re trying to say here. It seems non sequitur if you are trying to say “borrowers of higher interest rate benefit less from inflation”.
I wasn’t the one who said that part. I just wanted to correct the simplified math with some real world numbers that put into perspective how much wealth just being able to get a mortgage sets one up for
So what did you mean when you began your comment with “actually it’s the inverse”? Inverse of what?
Inflation, in absolute terms, is a larger benefit to people with higher interest rates.
Fair enough. I’m more thinking in a discrete sense… “saving money” versus “owing money”… rather than implicitly how much less are you paying.
I mean it more like if you would have borred 100K for a house in the 70s that was a lot of money, if you still live in that house you probably paid it back, but even if you didn’t 100K today isn’t that much money anymore
That’s a historically unusual artifact of the financialized housing market in a country where the population outpaces new available housing units while the economy continues to grow.
Go to Italy or - God forbid - Iraq or Ukraine or Myanmar, and you’ll find record inflation combined with falling real estate values. Buying a home in Lebanon or El Salvador or Bulgaria in 1975 wasn’t a good move. You had to be a certain proximity near the US/EU money printing machines and a distance from the US/Russia bomb dropping machines to get that arbitrage to work.
Inflation was added to your mortgage rate. And now that everyone saves with real estate instead of saving money, the cost of real estate is very high.
So while your payments do go down over time, your hours worked to either rent or own have gone up.
What do you mean with “inflation was added to your mortgage rate”? The prices of houses do go up but this is mostly a problem for first time buyers, after that your current house has gone up in price too, so that helps with the next house. But if you buy a house and don’t move your mortgage is fixed for 20 or 30 years (unless you go without a fixed rate). So your monthly payment will stay the same, while hopefully your salary goes up.
As in, the rate of inflation was added to the mortgage rate you were offered. This is because tax incidence falls on the less elastic side of each trade, and credit supply is much more elastic than housing demand.
Deflation is worse.
Prove it.
Okay, done and concluded. Thank you.
For the longest time on 4chan’s literature board (which was a pretty useful and interesting place overall), there was a guy who would spam pictures and fan fiction of the girl from Willy Wonka getting turned into a blueberry.
I have weird fetishes, so I don’t judge too much, but wtf.
you don’t see very clear QEDs on the internet very often but it’s always nice to see the reliance on data
I think you are required to make deflation porn a thing now. It’s like a rule.
I’m imagining some dude getting sucked off so hard he turns into dust or a raisin.
Are you seriously asking for a list of every economic downturn in history?
When prices drop, unemployment goes up, people can’t buy shit, rinse and repeat.
I think its more weird that in this situation where the cost of goods is raising faster then even the ’ normal ‘ rate faster then wages… you guys respond with it being preferable to the polar opposite…
Sure you may be dying of thirst, but it’s better then drowning! Completely ignoring like reason and stuff.
What if we valued labor over ownership of stuff?
The situations end up exactly the same. Either things cost more than you can afford, or your money ain’t worth shit to be able to afford anything. The only real difference is which number is fucked up: the price of the goods or the value of your money.
Sounds like an intrinsic flaw of monetary based economics then.
Maybe we should do something about it? It isn’t like alternatives don’t exist.
Okay, show me this happening. Because literally every economic crisis I’ve had the privilege to live through, thanks the the Keynesians, the Chicago School of Business types, and Friedmans, has been associated with inflation.
Show me. Prove it. These economists make claims and don’t have to back them up with empirical data or theories that predict future states of the world.
I don’t make the assumption something is true because it sounds good and tells a good story. Prove it.
The Great Depression.
Keynesians, the Chicago School of Business types, and Friedmans,
one of these is not like the others
We’ve had inflation as we know it since the 1970s and still had economic downturns since then. Were we simply not printing money hard enough?
Deflation increases the value of money vs. goods and services. As a consequence, deflation concentrates economic power in the hands of people who already have money.
If you have debt, deflation increases the value of your debt making it harder to pay off.
If deflation was persistent, couldn’t debt have a very low or even negative interest rate?
Who would lend at a negative rate besides friends and family? Here’s a bar of gold, please give me back half a bar of gold in a year.
Yeah I don’t really understand that part either, but it has happened
Inflation makes goods aka stocks increase value, which makes rich fucks that live on loans be able to then ask another loan for a bigger amount to pay off the loan from before just because their assets passively rose in value.
It’s the scam by which the ultra rich live by doing absolutely nothing while the rest of us that are saving for a house or whatever see our savings year by year diminished.
Yeah fuck that.
The issue is that they even get loans when they have no real collateral to give.
Most people also have savings or a pension fund which is indirectly put into the stock market, that’s how you get interest etc.
Am explanation repeating the same wrong ideas isn’t a proof
How are you measuring the concentration of economic power - Gini coefficient?
No inflation would mean that we would have no interest on our bank accounts, no wage increases, no profit increases etc. It is part of the circular economy, and it can work according to that theory, but we all together need to reform starting with the massive companies.
Well inflation IS bad, and at least here is outstripping pay increases for most people.
But those burrito private taxis are probably one of the few things going up in price more slowly than, you know things you actually need.
I haven’t gotten a raise in almost 10 years.
Different companies.
Moved to a different state.
Now I just can’t find work period.
Inflation isn’t the only problem.
I am really sorry. I know how shit it feels being out of work. If you want to vent I’m here.
In this case however, both are bad.
Both is good is more in reference to picking both as the problem is good. Not that either choice is any good lol.
Boomer meme
I’m a middle aged man. I’ve paid my mortgage. I’ve got savings. My pension is doing alright. I’ve got my shit together.
I still eat beans on toast more often than I get a takeaway. You don’t need to send half your dinner money to the silicon valley cunts that are fucking everything up. Support your local food places by going in, that way they get all the money.
This cost me 1.80USD. Turns out if the government works to keep food prices low and gets rent down to 300-400/mo in the middle of major cities, 1 person running a small busibess can feed a lot of people cheaply.
Back in the 90s and aughts you could get pizza or Chinese delivered. Usually only at the cost of throwing a few singles for the driver. While it was probably exploitative of the drivers, it did not take 30% of the value of the meal and send it to a rich moron in Silicon Valley. It was not seen as super luxurious to get pizza delivered on a Friday night.
2019: you could buy a house if you never went to Starbucks!
2025: no one cares how much money you save working from home, get back to work, get back to the kitchen, deal with the tarrifs!
Tbf I can still just ask the pizza place and they’ll deliver to my door at like €3 without ever having to use an app.
Burritos should ride on the bus.
New startup: BusGrub.
You put in an order for what you want and pick a timeslot a few hours in the future. E.g. for dinner, you put your order in at like at like noon and pick a 5-7pm window. Then, approaching your scheduled slot, a bus goes all around the area, picking up every order for that slot in the area, then swings around to each drop-off over the course of like two hours.
Result: Everyone enjoys cheaper, but gross soggy food.
Please give me $20 mil starting capital, thanks.
This is like a food truck with extra steps.
Shhhh, I’m a Silicon Valley genius and deserve millions in venture capital. Call me Elizabus Holmes.
I mean, both. Frivolous personal spending is bad. Inflation is bad. These two things are both bad, but not in scale. It’s possible to say “Uber Eats is a waste of money”, “Uber is a greedy corporation extracting money without value”, “Corporate taxation has affected prices in a way that’s negative to the consumer”, and “Inflation and trade instability have made it harder to have the lifestyle we expect”.
None of those are contradictory. Some can be changed on a personal level. Some need greater influence involved.
I notice that learning to cook is never an option
My niece was highly Uber eats dependent. Got her an air fryer for Christmas and it literally changed her life. Sometimes people want better but don’t know how to get there
We carry access to all the knowledge of the world in our pocket.
Abundance of unstructured and chaotic knowledge that is blended with misinformation, ads, memes and attention grabbing 5 second videos tends to overwhelm most people.
It is buried in trash.
Okay, you’re…
…not wrong
Vegan, here. If I didn’t cook, I wouldn’t eat.
Some government hand out “baby kits” for newborns - cot, blanket, nappies, bottles etc.
I think they should also hand out “self sufficiency kits” to new adults - pot & pan, utensils, cutlery, self sufficiency book w recipes, salt/pepper/herbs, coffee, tea seeds, vouchers and some other bits & pieces. Basically something to foster some independence, interest in cooking, diet and other life skills in new adults. And the school curriculum should also foster life skills.
Doesn’t stop people eating out or buying takeaways but it shouldn’t be the norm.
That’s honestly shit your parents should teach you tbh. Though not everyone has a decent set so I agree on the school curriculum bit. Teach it in middle school for sure.
Thats funny because Stalin did exactly that!
I’m so happy to have grown up in a country where not learning to cook isn’t an option.
I’m also from the US!
I think you misread their double negative.
No, I read it correctly.
buying groceries is also more expensive than it should be. you also have to take the time to go do that, and if you don’t have a car youre not likely to be getting very much stuff. then, you have to prepare the food, cook the food, and clean up after. i dont know about you, but my prep space, cooking space, and cleaning space are all the same small counter. im perfectly capable of cooking a meal, but I also hate cooking and don’t enjoy it, for all the reasons i just said.
Make bigger batches and freeze portions. And whatever expense groceries are, you can expect food cooked by someone else and delivered by someone else to be 3x as much.
This is stupid. We pay other people to do things we can’t or don’t want to do all the time. That’s what economy is.
The fact that people who order takeout could also cook at home instead doesn’t diminish the impact of the inflation spikes that began with Putlers invasion. You can’t fix the problems of neoliberalism on an individual level.
Op buys avocado toast
Millennial upvote farmer
Avocado Toast Procurement Specialist and Millennial Upvote Farmer couple.
House Shopping Budget: 1.3Million.
In high interest loans
Says the guy who wonders if Smurfs fuck and talks to strange men in metal bunny costumes.
I don’t think about fucking my family that’s gross
I don’t get why people would waste money on delivery services. Would it kill someone to cook their own food, or collect food from a takeaway themselves? That’s especially true for fast food where the fees & delivery charges could cost almost as much as the food itself.
I’m sure many rely on it for a good reason. A food delivery company in my country partners with a charity to enable phone orders and free delivery to the elderly.
It’s nice as a “now and then” kind of deal. It’s also a boon for elderly or disabled folks, especially for groceries. Or if you forgot your lunch and the traffic is heavy near your job to get food in time.
The costs of Doordash/Uber Eats gets socialized pretty heavily. Where I live, most restaurants just upped their prices 20-30% across the board to account for the DSP fees. Most of the time I’m ordering from Doordash, it’s genuinely cheaper than actually eating in the restaurant
That’s strange. Where I live, Doordash and all the other delivery services list higher menu prices than what you’ll see at whichever restaurant you go to. If a menu item is normally $15, Doordash will list it as $18. This is before they even add the service fees.
I think that’s probably everywhere. They passed a delivery service fee limit law here and parasites like DoorDash literally just whined about it in the app and added some additional fee right there.
Yup, I just jump from deal to deal and have Dashpass. Ends up being almost the same price as getting it myself.
