Nick Szabo  🔑

now we are just arguing over definitions. by my (conventional) definition (i wrote the slide to which you object), inflation is NOT credit risk, it is valuation risk. if you want to include valuation risk in your definition of credit risk, ok, but you are not disputing the claim.

You are at this point just confusing your readers with bad propaganda by claiming that a phenomenon roughly under the control of the debtor that can arbitrarily reduce the value of the debt is not a credit risk.

no, i’m not. you attended the talk in which that slide was given, you know that valuation risk was not ignored, but was much discussed in that talk. the slide to which you now object addresses a particular historical claim, tgat the USD has been a poor value store. It has not,

But "no credit risk" usually is not discussed in such a context, it is just used dishonestly as it was in the above use of this lide. And in any context it is an extremely confusing way to artificially constrain the definition of "credit risk."

what you call “dishonesty” is just use of a conventional definition you’d prefer be different. would you object less if the word “default risk” were used instead of “credit risk”? or would you object because inflation can be claimed in a substantive sense to be default? i’d agree

That's not how people use the term "credit risk" in other contexts besides the propaganda context of the bonds of one's favorite government(s). For example, analogous situation, if a homeowner damages the home, used as collateral for mortgage, that's a credit risk.

People in the private credit business don't make up separate artificial categories of risk and then claim their debt carries no credit risk. Only government bond propagandists do that.

the holder of a private mortgage’s credit risk is the risk of nonrepayment. loss of housing value affects credit risk because it affects the probability of nontrpayment. people underwater on their mortgages are much less likey to repay tha people who would lose home equity in a