TheNiche Posted March 23, 2009 Share Posted March 23, 2009 But what does it have to do with inflation? If the inflation rate passes their credit card interest rate, they come out ahead by not paying for that hammer.The example had nothing to do with inflation; it was an explanation of my earlier correction of your erroneous use of accounting principles.In my example, they paid off their credit card at the end of the month, thereby not incurring any interest expenses. In the event of high rates of inflation, they came out ahead in the example only because they expeditiously converted depreciating assets in the form of Dollars to an asset with increasing nominal market value and a stable real market value relative to all other goods. This is related to the concept of shoeleather costs, one of the drawbacks of high inflation. Link to comment Share on other sites More sharing options...
memebag Posted March 23, 2009 Share Posted March 23, 2009 The example had nothing to do with inflation; it was an explanation of my earlier correction of your erroneous use of accounting principles.In my example, they paid off their credit card at the end of the month, thereby not incurring any interest expenses. In the event of high rates of inflation, they came out ahead in the example only because they expeditiously converted depreciating assets in the form of Dollars to an asset with increasing nominal market value and a stable real market value relative to all other goods. This is related to the concept of shoeleather costs, one of the drawbacks of high inflation.I'm still unable to figure out what this has to do with my first post. Link to comment Share on other sites More sharing options...
TheNiche Posted March 23, 2009 Share Posted March 23, 2009 I'm still unable to figure out what this has to do with my first post.You made an assertion that I challenged; I explained my challenge; you didn't understand my explanation; I expanded the scope of my explanation. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.