Paul Krugman

@paulkrugman ↗

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Last Checked May 15, 2022

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Thu Mar 17 18:12:33 +0000 2022

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Paul Krugman @paulkrugman

But wait: suppose it takes time to plant a tree — you can't borrow the $100 and immediately put it in the ground. Instead, suppose that it takes a year from conceiving of the investment to actually laying out the money 11/ — PolitiTweet.org

Posted March 17, 2022

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Paul Krugman @paulkrugman

(I said I was going to ignore compounding). Now suppose you expect 1% inflation, so the tree can be sold for $120. Then it's worth doing if interest rate <2%; it's the real interest rate, nominal minus expected inflation, that matters 10/ — PolitiTweet.org

Posted March 17, 2022

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Paul Krugman @paulkrugman

In that case, the real interest rate that matters isn't the rate over the 10 years starting today; it's the real rate over the 10 years that start *one year from now*. Ordinarily that's not an important distinction. But times are unusual 12/ — PolitiTweet.org

Posted March 17, 2022