Quote:
Originally Posted by vicky_molokh
Actually, inflation is a totally separate concern. . . .
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I do have to beg to differ here. Inflation is one of the factors any financier worth his salt will take into account when deciding what interest rate is acceptable for a loan. Same can be said in reverese when offering a loan. Offsetting inflation is the bare minimum an interest rate needs to accomplish. As a borrower, I would want inflation to be higher than my interest rate, so I end up paying back less purchasing power than I borrowed. As the bank, I want jnterest to be higher than inflation.