Randon inflation has a similar disconcerting effect on our financial markets. Each year for instance we know that inflation will produce a tax increase but we don’t know how large in will be where unexpected inflation proves especially disruptive, however is in its effects on traditional financial contracts between borrowers and lenders just as blueprints cannot be based on an unstable and unpredictable measure of distance, finance contracts cannot be based on an unstable and unpredictable measure of distance, finance contracts cannot be based on an erratically shrinking measure of value, It the rate of inflation becomes sufficiently unpredictable both borrowers and lender, will become increasingly reluctant to bind themselves into conventional long term fixed interest rate contracts.
There are no reviews yet.