Inflation Outstrips the Rate of Return
Readers of my blog will recall that I often write about the use of a total offset when calculating future lost income. Too often, plaintiffs’ attorneys hire economic analysts who, in projecting future economic losses, net you a negative discount rate. This has the effect of reducing the overall projection of future lost income.
I have been arguing for a long time, that these economic analysts are doing a disservice to injured victims.
According to a story published by Bloomberg in early September, the yield on the 30-year treasury bond sank to a new low of 3.27%, while the 10-year note fell to 1.9%. If the inflation rate stays anywhere close to its current modest 3.6% pace, long term investors will be guaranteed to lose money after factoring in inflation’s toll.
This gives greater support why a net negative discount rate should not and must not be used.
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