Simon has written a rather technical article discussing some of his finding when investigating the effects of inflation on leveraged investments: Does Inflation Help or Hinder Leveraged Investments?
Synopsis
While inflation causes the cost of borrowed money to decrease over time (in real terms), it also causes the value of invested capital to decrease over time (again in real terms). This article briefly discusses the phenomenon and investigates how these two competing forces interact and whether inflation is indeed better or worse for leveraged investments.
