Originally Posted by
fcoolaiddrinker
hard to argue with that but from a big picture going from a decade of 2-3 to potentially 3-4 or even 5 shouldn’t be a major problem. Plan accordingly. Super low interest rates punish savers and rewards debt. It Also causes some inflation as it adds liquidity. Until the supply chain issues work themselves out and the fed starts to raise rates (both should bring down inflation) it’s pretty difficult to predict where exactly inflation ends up longer term.
Ok, so we negotiate a new CBA with the prospect that there will be a 5% inflation rate. Inflation COMPOUNDS ANNUALLY, meaning at the end of year one we’ll need another 5%, then year two 105% of THAT 105%, then at year three, 105% of that (105%x105%) just to stay even. We need damn near 128% raise every five years (assuming we actually GET a new CBA every five years) and at that we are only running in place.
And reward debt? SERIOUSLY? Mortgage rates averaged 16.63% in 1981. Good luck going in debt at that rate.