Quote from: Gyfts on September 04, 2022, 04:33:40 AM

Quote from: odunybiz on August 18, 2022, 05:39:42 AM

Inflation has increased rapidly over the last year at the world has emerged from the pandemic. At the moment in the world where inflation rate Observation: Comparing the two men with the lenders profit when loan was given, if in just 9 months the purchasing price of man B is close to the total amount payed back (purchasing price + interest) by man A, what happens at the end of the 16 months if inflation keep increasing. If the lender decide to buy a tricycle after man A had finish paying his money. He will end up adding to the money before he can purchase one. When lending money to man A, the lender believes he’s making a profit of #500,000 but this doesn’t worth it anymore within that 16 months as inflation keeps increasing.

Lenders are factoring this in by just raising their interest rates. It isn't difficult.

Lender recognizes their purchasing power to decreasing over fixed amount of time, by default 2% yearly compounded by whatever government mismanagement adds on top of that, they increase interest rates to cover that reduction in purchasing power by some value X. Whatever calculation that is is beyond what I can articulate, it would be dependent on the lender.

Borrowers aren't in a spot of luxury here. Lenders know the market better than anyone, hence they have the capital to lend. You'd have to take a gamble and secure a loan with low interest prior to inflation.

Would really be that common sense for those lenders or simply with those business owners which they would really be tending to make adjustments just to cover up those percentage loss due to inflation.
They wouldnt really be that dumb on not to make out adjustments because it would affect profitability and the ones who would greatly be affected is into those lendors who do took the loan.
They are the ones who do suffer out and this is what we do know that rich becomes richer and middle classes do pay up higher tax and poor becomes even more poorer.
Lets just embrace the reality or casual stuff.