No; there's no free lunch. Your nominal debt on the real loan is going up; focus that, and it will wipe out the illusion of gain.
If your goal is to cash in on ambient naivety rather than correct it, there is an opportunity to exploit the lack of competition which understands the indexed option: offer people indexed loans & charge an above-market real rate. For them, it will often be attractive: borrowing power they wouldn't have otherwise. For you, market-beating return.
My goal is the restoration of authentic, full-bore borrowing power, and the prosperity it unlocks.
Of course the facts sound preposterous; they are preposterous. But they're true, and there's no trick. People have been explaining this fervently for 204 years; I've been one of them for 41 years. I'll eventually be presenting a history of what kept the news from those whose lives it would have changed, with such lessons as I see, but for now here's enough to get the ball rolling: a few quotes and links, followed by an explanation of what the "nominal interest rate" is, and how wealth-measure finance (to name it after the desired effect rather than the technique of indexing) works.
Thumbs up from 3 Nobelists:
Milton Friedman, How to Save the Housing Industry Newsweek, 1980:
Franco Modigliani, New Mortgage Designs For Stable Housing In An Inflationary Environment, 1975, p35
Robert Shiller, Public Resistance to Indexation: A Puzzle, 1997
The mechanism of false interest: Clawback and TOFLI
Clawback: nominal interest rates are what they are because of a crude, thoroughly thoughtless response to inflation. Inflation - where debt is defined in terms of the currency unit - shrinks the debt, in value. This can bankrupt lenders; it did on a large scale in the S&L crisis of the 1980s. Because of this, currency loan lenders are obliged to guess at what inflation will be over the life of the loan - and tack this onto what they call interest. In real terms, it's the premature clawback of principal. If the lenders guess right, they stay solvent - paid back prematurely by false interest that offsets the shrinkage of their asset. However, the elevated rates reduce borrowing power, so they can lend less to each client, and are obliged to hunt out more clients, and also to waste time and effort churning the capital back out again.
TOFLI: tax on false lender income: the government, no wiser than the banks, treats clawback as lender income (which it isn't: it's capital coming home). Lenders of course have to cover this as well, so it becomes the third component of nominal interest. For institutional lenders in the US, the tax rate is 21%. This must be compounded - there will be tax on the tax-offsetting charge, and so on - the sum of a geometric sequence, 1/(1-.21) which brings TOFLI in at 27% of clawback.
I refer to the total as RICTOFLI: real earned interest + clawback +TOFLI. So, in the US today, the equation is:
RICTOFLI 6.5% = real interest 1.2% + clawback 4.2% + TOFLI 1.1%
Reading
The best historical introduction: Irving Fisher, Stable Money: a History of the Movement, chapter 2 (intro & chapter 1 also good)
Shiller on Chile's UF: Indexed Units of Account: Theory and Assessment of Historical Experience
Bruce Middleton – Medium
Charts
Payment values are stable for an indexed loan, but decline with the currency unit for a currency loan. The concept of harnessing a lifetime of earning power is thrown away.
US mortgage borrowing power, currency measure vs wealth measure:
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