Or an annuity. But you've dodged the question. Why do you worry about the relative increased cost of a short term loan over the continuous purchasing power erosion of a lifetime of savings?
Increased cost of mortgage in addition to decreased value of the house when I sell it
But the money has increased in purchasing power, all houses are now 'cheaper' when you sell, and the money you get for selling it goes farther. If you sell your house, where are you going to live anyway? Under a bridge? Or would you buy another house, that also is cheaper in nominal terms than when you bought your first?
Do you think there are no negative effects when inflation results in malinvestment of scarce resources and the boom/bust cycle?
Why would I think that? Do you think that?
Because you whine that increasing the purchasing power of money makes loans more expensive than under an inflationary environment, and ignore the much more deleterious effects of inflation in distorting economic activity, reducing the value of savings, creating ephemeral profits, and squandering resources.
I would rather the cost of borrowing be born by the borrower, instead of partially fobbed off on the pensioner, the saver, and anyone else subjected to higher prices, but not a recipient of the newly created money that causes it.
So if Boeing doesn't increase productivity and has to reduce prices every year by 3%, that doesn't cost Boeing employees some jobs?
Yes, just as if Dell doesn't increase productivity now they find themselves removed from the marketplace by their competitors who do. Computers, phones, pencils, or airplanes, the principal of capitalism is the same: Increase productivity to increase profits, reduce prices, and increase marketshare, or be replaced by those who do. Do you abhor competition as 'destructive'?
If Boeing defaults on their debts, that doesn't harm their lenders? Those lenders don't reduce their outstanding loans?
Do you want bailouts for all bad business investments? Inflation is a form of bailout, extracted by the borrower from all the other users of that specific fiat currency to reduce their relative debt burden. I want NO bailouts. Where do you stand on the subject?
Absolutely! Except for those people who lost their jobs, or can't get a loan to keep their business going (and their employees) and anyone who supplies those businesses or those unemployed workers.
If your business needs loans to survive and mine doesn't, why should you get bailed out at my expense, and the expense of everyone else who has or earns a dollar?
Do the suppliers of computer memory care if Apple purchases their product, or Dell? They'll happily sell to whichever one the marketplace sees fit to allocate the resources to buy their product.
I am aware of the money multiplier. That doesn't make 0% cash more profitable than a 1.87% bond, does it?
Who is loaning cash at 0%? J.P. Morgan Securities LLC is a primary dealer. JPMorgan Chase & Co. is the parent company. I don't think primary dealers make direct loans, but I could be wrong since the rules were changed after the 2008 debacle. JPM Sec. LLC deposits their check at the other subsidiary, JPMorgan Chase Bank, N.A. Now JPM Sec. can still spend the money they have received from the Fed, while the Chase subsidiary makes more money loaning those deposits. But there wouldn't be any new deposits to loan, if the Fed hadn't printed up more money from thin air to buy the Treasuries in the first place. Hence, JPM makes money off the Feds printing. If you want to split hairs about the subsidiaries, you're only fooling yourself.
Short term loan? 30 years is short term?
And 30 years of deflation of the value of the home.
But the money has increased in purchasing power, all houses are now 'cheaper' when you sell, and the money you get for selling it goes farther.
That is awesome. The home you paid $100,000 for, plus 30 years of interest, is now worth about $40,000. You might have been better off not spending the $100,000, plus 30 years worth of interest. I'll bet that money would be worth more than the $40,000 asset you own now.
Because you whine that increasing the purchasing power of money makes loans more expensive
Yes, deflation makes loans more expensive. First time you're hearing that?
I would rather the cost of borrowing be born by the borrower
And when the borrower defaults, borne by the bank. And the economy as a whole.
The "short term" loan on the house ends up costing 2.5 times as much in the last year of the mortgage, compared to the first year.
Is that a problem for you, or only for people who understand compound interest?
Do you want bailouts for all bad business investments?
No. And I don't want deflation to destroy good investments.
If your business needs loans to survive and mine doesn't, why should you get bailed out at my expense, and the expense of everyone else who has or earns a dollar?
Yes! We need deflation, to kill all businesses that borrow money! Now you get it. LOL!
I am aware of the money multiplier. That doesn't make 0% cash more profitable than a 1.87% bond, does it?
Who is loaning cash at 0%?
Nobody, but when the Fed gives JP Morgan cash, in exchange for their bond, they stop earning interest on the bond (the Fed owns it now) and don't earn any money on the cash (now owned by JP Morgan).
Now JPM Sec. can still spend the money they have received from the Fed,
Great, show me how they spend it that gives them the benefit of getting the money first.
while the Chase subsidiary makes more money loaning those deposits.
If they wanted to loan more money, they could have sold the bond, without Fed involvement.
But there wouldn't be any new deposits to loan, if the Fed hadn't printed up more money from thin air
As I said, they could sell the bond.
If you want to split hairs about the subsidiaries, you're only fooling yourself.
My comments had nothing to do with subsidiaries, only the claim that the primary dealer profits from having cash instead of a bond.