"If we accept that borrowers benefit more from inflation than the loaners than isn't it preferable to be the borrower during a significant run up in inflation?"I'll stop here, since must of the post is reliant on this assertion, and I don't accept this as written.Irving Fisher noted that because potential lenders can always convert their currency and financial assets into real asserts and earn the real rate of return, they must charge an interest rate above and beyond the real rate of return.Therefore, anticipated inflation is marked into the loan rate. The point is that unanticipated inflation benefits those making payments under a nominal currency contract.I could therefore state:"If we accept that borrowers benefit more from inflation than the loaners than isn't it preferable to be the borrower during a significant unanticipated run up in inflation?"I think this change makes it clear that the transaction you are proposing is really speculation on future inflation (because this also works in the other way - that unanticipated deflation hurts borrowers).Tom
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