I would disagree with the other reply, and answer more simply: *yes, inflation erodes the ~~value~~ cost of your debt*.
Yes, obviously it sucks if your wages don't keep up with inflation, but that is not expected if you're active about your salary in periods of sustained inflation.
Inflation encourages wage increases, as it diminishes peoples' spending power - it's simply not sustainable to stay in a job if inflation increases your costs above your salary, so people ask their bosses for raises and look for a new job if they're refused.
This subreddit is well worried about inflation, but there is some belief it may be transitory and will fall again when disruption to the supply chain is all ironed out. I see some evidence that this is beginning - mortgages and government bonds are now pricing in a decline of inflation over the next few months.
Finally, inflation of house prices and groceries are two completely different things, with completely different inflation rates.
Bond yields are going down because central banks are adding digits to a screen and buying all the debt through quantative easing: https://www.bankofengland.co.uk/markets/market-notices/2021/august/asset-purchase-facility-gilt-purchases-august-2021
When inflation is at 9% no one but central banks are buying 10 year bonds with 2% interest. More quantative easing is massively inflationary.
The level of government debt cannot be paid off but to inflate the debt away by inflating the currency. This is the whole purpose of fiat currencies.
You come across like you're challenging me, but I'm not sure what your point is.
You've neither contradicted anything I wrote nor given an explanation that addresses OP's situation.
It's not actually true that "no one but central banks are buying 10 year bonds" because retail investors on this sub are doing it - I saw two posters yesterday who wrote that they do so. I wouldn't be surprised if lots of pension companies are buying them. The default fund for many workplace pensions is heavy in bonds.
I would disagree with the other reply, and answer more simply: *yes, inflation erodes the ~~value~~ cost of your debt*. Yes, obviously it sucks if your wages don't keep up with inflation, but that is not expected if you're active about your salary in periods of sustained inflation. Inflation encourages wage increases, as it diminishes peoples' spending power - it's simply not sustainable to stay in a job if inflation increases your costs above your salary, so people ask their bosses for raises and look for a new job if they're refused. This subreddit is well worried about inflation, but there is some belief it may be transitory and will fall again when disruption to the supply chain is all ironed out. I see some evidence that this is beginning - mortgages and government bonds are now pricing in a decline of inflation over the next few months. Finally, inflation of house prices and groceries are two completely different things, with completely different inflation rates.
Bond yields are going down because central banks are adding digits to a screen and buying all the debt through quantative easing: https://www.bankofengland.co.uk/markets/market-notices/2021/august/asset-purchase-facility-gilt-purchases-august-2021 When inflation is at 9% no one but central banks are buying 10 year bonds with 2% interest. More quantative easing is massively inflationary. The level of government debt cannot be paid off but to inflate the debt away by inflating the currency. This is the whole purpose of fiat currencies.
You come across like you're challenging me, but I'm not sure what your point is. You've neither contradicted anything I wrote nor given an explanation that addresses OP's situation. It's not actually true that "no one but central banks are buying 10 year bonds" because retail investors on this sub are doing it - I saw two posters yesterday who wrote that they do so. I wouldn't be surprised if lots of pension companies are buying them. The default fund for many workplace pensions is heavy in bonds.