Inflation Protected

Indexed. You're a lender-be. You didn't listen to Shakespeare, so you gave a loan to your (now former) friend. The interest rate is indexed to inflation, and it starts at 4%. Each year, the two of you agree to accept the assessment of inflation in the U.S. as tracked by whatever government entity. And this year, it turns out that inflation was 3%.

So the new rate on your loan? 1.003 x .04 or 4.12%. The loan you made is inflation-protected, in that it goes up at the same rate as does inflation.

Hope your friend remembers that protection when he "forgets" to pay you back.