> I believe the "real" interest rate on TIPS is fixed - while the nominal rate fluctuates with CPI.
According to that reasoning, interest rates almost never change because they're typically a given premium to inflation.
We don't accept that reasoning because you repay what the note says, not the relationship between that number and some other number.
> Your second point is, of course, right on. But if we have to borrow $x, better to borrow it now at ~0% than later at (likely) >0% interest.
Umm, no. Borrowing now at 0% and rolling that over later to a new loan at 10% is not better than simply borrowing later at 10%.
Yes, borrowing now is better if you do something useful now with the money, something that you'd delay by borrowing later.
However, there's little evidence of that occurring. We're running up lots of debt on dumb spending. If you want to do some smart spending, take the money from dumb spending.
According to that reasoning, interest rates almost never change because they're typically a given premium to inflation.
We don't accept that reasoning because you repay what the note says, not the relationship between that number and some other number.
> Your second point is, of course, right on. But if we have to borrow $x, better to borrow it now at ~0% than later at (likely) >0% interest.
Umm, no. Borrowing now at 0% and rolling that over later to a new loan at 10% is not better than simply borrowing later at 10%.
Yes, borrowing now is better if you do something useful now with the money, something that you'd delay by borrowing later.
However, there's little evidence of that occurring. We're running up lots of debt on dumb spending. If you want to do some smart spending, take the money from dumb spending.