You do because you will have to take on more debt just to survive. Not everyone who got in to CC trouble did so because they were out buying 52" TV's with plastic. Many of them bought groceries or medicine because the purchasing power of the dollars was decreasing, and this was during normal inflationary times. If hyperinflation kicks in those who are in debt are going to get absolutely crushed. Forget about paying off the house with cheap dollars. You'll need them to pay your $800 per month heating bill.
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It's official : Bernanke has lost his mind
- Thread starter Kicking
- Start date
Quote from makloda:
You type up all this political mumbo-jumbo but you can't answer the question.
I will ask again: in the scenario of run-away hyperinflation (e.g. 50,000% a year annualized), which side would you prefer. Would you rather be OWED $1,000,000 of paper money on 30 year fixed interest terms? Or would you rather OWE somebody $1,000,000 of paper money on 30 year fixed interest terms?
I answered your question. Scroll back. You still have to live and eat whilst enjoying paying back past debt in newly-earned, hyperinflated dollars, which continue to lose pace with expenses. If you missed my point, and my reference on how to find out the reality of hyperinflation and devaluation on a middle class, I cannot help you. Good day, sir.
I'll answer the question. I'd rather be OWED the money because when you can't pay the mortgage I'll be coming to take away your hyperinflated house that I lent you $1,000,000 to buy. Only now.....it's worth $3,000,000. Now who wins?
Quote from makloda:
You type up all this political mumbo-jumbo but you can't answer the question.
I will ask again: in the scenario of run-away hyperinflation (e.g. 50,000% a year annualized), which side would you prefer. Would you rather be OWED $1,000,000 of paper money on 30 year fixed interest terms? Or would you rather OWE somebody $1,000,000 of paper money on 30 year fixed interest terms?
A house is a real asset that appreciates in line with hyperinflation while the underlying debt stays the same. If you don't like the house example you can replace it with any other hard asset (commodities, stocks etc).
You didn't answer anything. In hyperinflation, would you rather owe paper money or be owed paper money.
You didn't answer anything. In hyperinflation, would you rather owe paper money or be owed paper money.
Think about this for a minute. I'm a bank. You walk into my store and ask to borrow $1M. I create $1M completely out of thin air. You buy your house, hyperinflation kicks in, you can't make your payments and that completely, utterly worthless loan, that cost me next to nothing to create, is backed by your house, which, as you said, is a real asset. I would trade worthless paper or worthless data on a computer screen for a real asset, in a hyperinflationary environment ANYDAY! How can you not see this?
Quote from makloda:
A house is a real asset that appreciates in line with hyperinflation while the underlying debt stays the same. If you don't like the house example you can replace it with any other hard asset (commodities, stocks etc).
You didn't answer anything. In hyperinflation, would you rather owe paper money or be owed paper money.
I'll sell it for $3,000,000 and give you back your $1,000,000. Net gain $2,000,000. Thank you very much.Quote from the1:
I'll answer the question. I'd rather be OWED the money because when you can't pay the mortgage I'll be coming to take away your hyperinflated house that I lent you $1,000,000 to buy. Only now.....it's worth $3,000,000. Now who wins?
True. But you forget that it will also cost this person millions per month to feed himself and heat his home. And he won't have a job to make the million a month to pay these bills. Only creditors can survive hyperinflation because they get the money first.
Quote from makloda:
So if I owe the bank $1,000,000 for a house on a 30 year fixed mortgage. Say starting in 2010, inflation is suddenly approaching 50,000% annualized overnight as Bernanke and the rest of his evil conspiring central bankers controlled by rich Europeans step up the velocity of the money printing presses.
I pay back the $1,000,000 with worthless paper and keep the house.
The bank doesn't lose? I got a house for free and the bank gets worthless paper. Let me know which side of the deal you prefer.
Creditors always lose in a hyperinflation scenario. Debtors make out like bandits.
And then you turn around a buy what with your $2M? Your scenario is a possibility but you need to find a buyer at a hyperinflated price (we just saw what happened in that situation) and then you have to buy another house to live in, which will be inferior to the one you just sold because you are buying a house worth only $2M instead of the one you sold for $3M.
Quote from makloda:
I'll sell it for $3,000,000 and give you back your $1,000,000. Net gain $2,000,000. Thank you very much.
I buy the house with your borrowed money, it triples in paper value thanks to huge inflation. I sell it for a nice fat paper gain and give you back your money. Thank you very much.Quote from the1:
You buy your house, hyperinflation kicks in, you can't make your payments and that completely, utterly worthless loan, that cost me next to nothing to create, is backed by your house, which, as you said, is a real asset.
Yes, but you realize I got that smaller $2m house for FREE!Quote from the1:
And then you turn around a buy what with your $2M? Your scenario is a possibility but you need to find a buyer at a hyperinflated price (we just saw what happened in that situation) and then you have to buy another house to live in, which will be inferior to the one you just sold because you are buying a house worth only $2M instead of the one you sold for $3M.
I borrowed your $1m, then sold for $3m. Then paid back your $1m and kept $2m. Then bought a smaller house for the $2m paper profit.