12-26-2016, 02:51 AM
And here a useful reminder of the destructive powers of inflation..
Households and businesses are reluctant to finance long-term investments with short-term loans or with variable-interest-rate loans, because a jump in inflation would cause their interest payments to rise sharply. Indeed, Argentina’s history of high and variable inflation has destroyed the domestic mortgage market, making it impossible for a household to use a mortgage to buy a home. Businesses are also reluctant to borrow, because they recall how previous increases in inflation — and thus in interest rates — pushed otherwise healthy companies into bankruptcy. The life insurance industry has been destroyed by high and uncertain inflation as well. Given that no one knows what the peso will be worth when future claims are paid, why would anyone buy insurance with today’s pesos?