Why all of a sudden tech companies are not being favorable to their users?
Why all of a sudden tech companies are not being favorable to their users?
YouTube disallowing adblockers, Reddit charging for API usage, Twitter blocking non-registered users. These events happen almost at the same time. Is this one of the effects of the tech bubble burst?
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Could it have something to do with inflation?
The opposite. Inflation makes debt cheaper. If you borrow at 10%, and inflation is 10%, its like you borrowed money for free.
The issue is that central banks increased interest rates significantly. If you need to borrow more money, its at 14%, 16%, or higher now.
I was having trouble wrapping my head around this at first but if the example below is correct I think I get it now.
Suppose you borrow $10,000 from a lender at an interest rate of 5% per year, and you have to repay the loan in one year. Now, let's assume that there is an inflation rate of 3% during that year.
Without inflation:
Loan amount: $10,000
Annual interest rate: 5%.
Interest payment: $10,000 * 5% = $500.
Total repayment: $10,000 (loan amount) + $500. (interest payment) = $10,500.With inflation:
Loan amount: $10,000
Annual interest rate: 5%.
Inflation rate: 3%.
Interest payment: $10,000 * 5% = $500.
Total repayment adjusted for inflation: $10,000 (loan amount) + $500 (interest payment) = $10,500.
Inflation-adjusted value of repayment: $10,500 / (1 + 3%) = $10,145.63.In this example, the inflation rate of 3% effectively reduced the real value of the debt repayment to $10,145.63, making it cheaper in real terms. This is because the value of money decreased due to inflation, allowing you to repay the debt with dollars that have a lower purchasing power.`
$ is ambiguous. You need to say 2023$ vs 2022$. Once you have year-$ in front, everything becomes super-obvious.
Loan amount: 2022-$10,000
Total repayment: 2023-$10,500
Except April2023$ is 4.9% less value than April2022$: https://www.bls.gov/opub/ted/2023/consumer-prices-up-4-9-percent-from-april-2022-to-april-2023.htm
So April2023-$10,500 is equivalent to April2022-$9985.50, inflation-adjusted.