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0 pointslotsofpulp3y ago0 comments

I would expect that more likely than not, the same dynamics allowing the interest rate to be low also cause the purchasing power of the currency to decrease. A homeowner not able to increase their income to offset this decrease in purchasing power may be experiencing a net loss of purchasing power even if their mortgage interest costs decrease.

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ivanbakel3y ago

In a developed service-based economy, relative purchasing power isn't that important in the short term. You might eventually notice the indirect impact of imports being more expensive, but I doubt that matters too much to the average person.

You also have to account for the fact that house prices are rising - so even if you're losing purchasing power, you're still making nominal gains on your assets.

lotsofpulpOP3y ago

What is relative purchasing power?

In an economy where supply of labor is decreasing quicker than automation can replace it due to decreasing proportion of younger working people to older non working people, I would say being able to procure labor is a bigger problem than imports. And that will get harder if your cash flow buys less and less.

chiefalchemist3y ago

Bingo! Inflation!!

That too must be factored in. Cheap printed money === inflation

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