@Mattecheverria, your basic premise is correct that inflation makes the
real cost of borrowing less than the
nominal cost. Generally, for some inflation rate
i and a nominal borrowing cost
r, your
real cost of repaying a loan dollar or peso at some point in the future is given (in the form of an annual 'real' rate) by
The inflation factor in the denominator clearly makes your
real borrowing rate something less than r itself (your
nominal borrowing rate).
Hence, using your numbers, the real annualized borrowing rates in Argentina and UK would be in the vicinity of 4.8% and 1.3%, respectively.
Your UK - Argentina comparison is missing the mark by not taking into account the timing differences between your loan repayment outflows and your asset terminal value. In your illustration you're allowing the asset to bake in the oven at the inflation rate for 10 years, whereas you're repaying the loan steadily over the 10-year period. Since the asset isn't being monetized until at least 10 years out, then the interim loan repayments must be funded either from new debt or from liquidation out of other productive assets. The cost of doing so isn't captured in your numbers.
For a better apples-to-apples, change the borrowing to be a 10-year zero-coupon type. The Argentinian loan would have an accrued payoff at maturity of 13.786M (against an asset value of 8.59M) whereas the UK numbers would be 1.480M and 1.305M, respectively.
The fact that these are losing propositions is due to just what Paraclete mentioned: If your assets are just appreciating at the inflation rate, then they are generating a 0%
real return. In
real terms, you're borrowing in the UK (Argentina) at 1.3% (4.8%) to invest in a 0%-return asset; in
nominal terms you're borrowing at 4% (30%) to fund an asset which returns just 2.7% (24%).