The left-field threat to Europe ...

[DimPrawn]

Going home at 15:45??!?!

Civil service no doubt.

Or sas is a 14 year old schoolboy and it's time to leave the computer room, mummy is waiting.

[AtW]

Look. If tomorrow, the price of bread falls by 90% and your income falls by 90% (assuming it's not already zero) and everything else stay the same, has bread got cheaper?

Nope, because bread is small part of my costs and loss of 90% income will make everything else not just more expensive but probably unaffordable.

I can't see how your example is relevant anyway: price of bread gone up just like most of the food, petrol/diesel also, electricity, water supply ain't cheap (doubled in last 10 years).

[Old Greg]

Nope, because bread is small part of my costs and loss of 90% income will make everything else not just more expensive but probably unaffordable.

I can't see how your example is relevant anyway: price of bread gone up just like most of the food, petrol/diesel also, electricity, water supply ain't cheap (doubled in last 10 years).

So the price of bread has gone down 90% but it isn't cheaper?

[doodab]

So the price of bread has gone down 90% but it isn't cheaper?

What has this got to do with the completely unchanged price of a debt?

You aren't going to win the argument by confusing yourself you know.

[AtW]

So the price of bread has gone down 90% but it isn't cheaper?

How is this related to current situation when price of bread gone up by like 100%?

[Old Greg]

How is this related to current situation when price of bread gone up by like 100%?

It's an illustration of a concept. If you play along, we'll get there.

You see, bread has got cheaper but the ability to buy bread has not improved. Are you with me so far?

[doodab]

Actually, I just had an interesting thought. Let's say I have a £1000 debt over 1 year with a 15% APR. I'll need to pay £1150 to clear the debt yet the market value of that debt if sold would be substantially less than that because any valuation would take into account the "risk free" interest rate and risk of default. If the risk of default were judged to be particularly high the market value of the debt might even be less than the original principal.

Surely people ought to be able to buy their own debt at market prices?

[Old Greg]

Actually, I just had an interesting thought. Let's say I have a £1000 debt over 1 year with a 15% APR. I'll need to pay £1150 to clear the debt yet the market value of that debt if sold would be substantially less than that because any valuation would take into account the "risk free" interest rate and risk of default. If the risk of default were judged to be particularly high the market value of the debt might even be less than the original principal.

Surely people ought to be able to buy their own debt at market prices?

I expect that if you could afford it, it's value would be higher. Or perhaps not.

[doodab]

It's an illustration of a concept. If you play along, we'll get there.

You see, bread has got cheaper but the ability to buy bread has not improved. Are you with me so far?

I get it. But I fail to see what that has to do with the relative cost of something that HASN'T actually gotten cheaper. The face value of debt remains unchanged, it doesn't fall.

To put this into terms you can understand, if the price of bread remains the same and your wages have fallen 90%, has bread got cheaper?

[Old Greg]

I get it. But I fail to see what that has to do with the relative cost of something that HASN'T actually gotten cheaper. The face value of debt remains unchanged, it doesn't fall.

To put this into terms you can understand, if the price of bread remains the same and your wages have fallen 90%, has bread got cheaper?

OK, so the next step is:

If everything except bread goes up 10 fold in price, and your wages remain the same:

1. Has bread got cheaper?
2. Has bread eroded in value?