• WhatAmLemmy@lemmy.world
        link
        fedilink
        English
        arrow-up
        11
        ·
        edit-2
        1 month ago

        It’s not supposed to, but even the target interest rate of 2% per annum is ridiculous when you think about it. It means $1 = $1.20 after a decade, and after 50 years $1 = $2.70.

        357(1.02)^7 = 410 M so we’re actually almost double the target.

        • LastYearsIrritant@sopuli.xyz
          link
          fedilink
          English
          arrow-up
          5
          arrow-down
          2
          ·
          1 month ago

          ASSUMING your salary goes up with inflation, which is the idea…

          You bought a house with 2026 money.

          You’re still paying that same mortgage with 2046 money.

          20 years of inflation, but your debt remains the same (as you pay it off)

          If everything is functioning as intended, inflation encourages debt and spending, which drives the economy.

          • andyburke@fedia.io
            link
            fedilink
            arrow-up
            8
            ·
            1 month ago

            Ok, but your assumption is demonstrably untrue on average for about the last 50 years or so.