This does in fact make sense in a time of inflation, because the dollars used to pay back the principal amount
borrowed are worth less and less.
For authors whose books are in the higher price brackets, though (i.e. over $ 2.99), the situation is much less clear because
a borrow is worth less than a purchase.
Not exact matches
And if today's dollars
are worth a lot
less than the dollars of a few years from now,
borrowing money becomes expensive, even at zero percent interest.
If the value of that house fell by 20 % it would
be worth $ 600,000, or $ 50,000
less than what you originally
borrowed to buy the home.
If you
borrow a $ 1M in today's dollars, and hyper - inflation occurs you pay back the nominal value of the loan in dollars that
are worth much
less.
If the same economic scenario
were presented but interest rates
were low, banks may feel that taking the risk in loaning to
less - than - impeccable businesses
is worth it, particularly since they could also
borrow money from the central bank at extremely low rates.
The Brattleboro Area Affordable Housing group figures that if gross rent will recover the out - of - pocket costs in
less than five years, an apartment
is worth considering, especially if the owners can apply the rent to property taxes and insurance rather than repaying money
borrowed for the work.
The amount of the mortgage hasn't changed since you
borrowed with it in 2016 dollars, but now you
are paying it back with dollars that
are worth less than they
were in 2016.