Comment by ImPostingOnHN
1 day ago
A general, continuous increase in the overall price level of goods and services in an economy over time.
Not really related to the discussion here though, since we were determining whether the interest rate is zero.
But if they pay you roughly the inflation rate as interest, doesn’t that mean the use of your money is roughly free to them?
Yes, and alternatively you could invest your money in whatever they'd invest it in, and capture more of your money's value. You could even invest in risky things like stocks with your money, whereas they can't (with your money).
Any interest rate that is equal to or less than inflation is functionally zero (or less).
That is also true.