Billy Horner
Well-known member
What does £50M equating to £100M mean? Isn't that just a reflection of the stupidly high levels of inflation we've been seeing. What is the relevance?
Actually, it's even worse than that. If anything it's a self defeating argument.
If you borrow £50m then the amount that you owe is £50m. The amount that it goes up by annually is the agreed interest rate and has no direct link with the rate of inflation.
That's why wealthy people, who ultimately provide the funds that are borrowed, hate inflation, because it eats into/destroys the value of their returns on investment. It's the same reason why people who borrow as much as possible to buy the home of their dreams find themselves in disbelief at how little that seems 30 years later.
So if the argument is that the £50m borrowed would have cost £100m to borrow today, he's actually suggesting it was a good piece of business.