Should we Have Index Loans?
Though one can see why index loans have been advocated primarily as a means of protecting savers against losses resulting from inflation and/or as a means of stimulating private saving, it is nevertheless remarkable that discussions about, and propaganda for, index loans have largely centred on savers and saving. Index loans possess no characteristics which — even during inflation — put savers and lenders in a better position than ordinary loans (hereinafter called money loans). Whether, with a given rate of inflation, index loans will prove to be more advantageous to lenders than money loans depends entirely on their respective rates of interest.
KeywordsInterest Rate Real Interest Rate Credit Market Real Rate Private Saving
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