You’re describing who benefits from changes in the rate of inflation. Someone with a lot of credit card debt is worse off from high inflation because the rate of inflation was already priced into the rate they were forced to accept.
So let’s say we’ve got 25% inflation. The only loans you’ll be offered will be at >25%. An increase once you’ve already gotten the loan helps reduce its real value, but that initial 25% is coming out of your paycheck.
This is because the lender can just invest in anything else, while you need dollars now - the burden falls on the less elastic side of the trade.
You’re describing who benefits from changes in the rate of inflation. Someone with a lot of credit card debt is worse off from high inflation because the rate of inflation was already priced into the rate they were forced to accept.
So let’s say we’ve got 25% inflation. The only loans you’ll be offered will be at >25%. An increase once you’ve already gotten the loan helps reduce its real value, but that initial 25% is coming out of your paycheck.
This is because the lender can just invest in anything else, while you need dollars now - the burden falls on the less elastic side of the trade.