economics ?

E.F: economics ?
would it be advantageous to borrow money if you expected price to rise?

would you want a fixed rate loan or one with an adjustable interest rate?
Why it would be advantageous to borrow money if you expected price to rise?

Answers and Views:

Answer by Epicure M
yes; fixed (why would u want something to fluctuate, best if you can lock in a low fixed interest rate rather than it increase)

Answer by tmadhava m
yes; as prices rise, your income is also likely to rise, and the out-go at a fixed rate will be a lower percentage of your income. so presumably the ‘sacrifice’ is less. and obviously, you go in for a fixed rate loan – unless, of course, you mean that the interest rate is fixed, but charged on diminishing capital amount after deducting a portion of the outstanding principal amount of the loan. In this case, you repay as much as you can when your income goes up as a result of inflation, or when you get a windfall, so that the balance of the amount on which you have to pay interests get reduced.

Answer by LouiKung
I think borrowing money is not a good idea to fight inflation. Unless, you are actively employed and the job is steady and with decent income. One Nobel prize winner in economics with a good explanation that inflation is the “monetary phenomena”. Why prices go up that rapidly all over this world? The simple answer is there are too much money for some wealthy countries and too little for the poor ones. That’s why many middle class citizens in China are crying foul to the staggering inflation of everything. Why is that? The ” Too much Investments in stock markets and monetary funds” caused the inflation goes up like rockets, fast and high.
Some peoples are suitable to borrow money from tha banks, such as getting married, investing in housing markets and heavy in stock markets. I think if you are paying for the mortgage, it is better with fixed rate of interest, and the student loan is wiser with adjustable interest rate. If you are thinking of just borrow money to fight inflation, forget it, you probably have the problem to pay for your debt in full in the future. Hong Kong has many citizens are addicted to gambling in the race track, soccer games, stock markets, and a few engaged in buying high class residential units. Most of them are finally become losers. They borrowed monies from the banks, financial institutions, and the loan shsrk. Quite a few committed suicide, many of them become criminals (drug trafficking) and sex workers. I think you should learn to constraint yourself and keep away from materialism. It’s hard to overcome the common human weakness of greed, selfishness, and fear.