It's not supposed to, but even the target interest rate of 2% per annum is ridiculous when you think about it. It means $1 = $1.20 after a decade, and after 50 years $1 = $2.70.

357(1.02)^7 = 410 M so we're actually almost double the target.

[–] LastYearsIrritant@sopuli.xyz 3 points 3 days ago (1 children)

ASSUMING your salary goes up with inflation, which is the idea...

You bought a house with 2026 money.

You're still paying that same mortgage with 2046 money.

20 years of inflation, but your debt remains the same (as you pay it off)

If everything is functioning as intended, inflation encourages debt and spending, which drives the economy.

[–] andyburke@fedia.io 4 points 3 days ago

Ok, but your assumption is demonstrably untrue on average for about the last 50 years or so.