It's official : Bernanke has lost his mind

[the1]

Now keep in mind Makloda, you're a middle class guy, living in a $3M house. You sell and use your $2M profit (OH! Almost forgot, you gotta pay uncle sam on that now since you made a huge profit) and take your $1.3 ($700k to Uncle) million and buy a trailor. Dude, you just went from middle class to trailor park trash.

Quote from makloda:

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.

 

[the1]

You're cracking me up here man. I can guarantee you that you most certainly did not get that house for free. Do a little research on how an amortization schedule works.

Quote from makloda:

Yes, but you realize I got that smaller $2m house for FREE!

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.

 

[Bob111]

Quote from makloda:

Yes, but you realize I got that smaller $2m house for FREE!

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.

don't waste your time,trying to explain the obvious to a people,who have no idea what they are talking about..i was in USSR during the hyperinflation times and you right about how it's works. and this is why i did not expect any inflation any time soon. the banks,the creditors will be totally f*d. much more than they are right now. it will be similar to Japan situation

 

[the1]

You gotta pay Uncle Sam, I have the majority of the interest up front, and you're trailor park trash. Homey, Economics 101 and Finance 101. Were you banging a bong during BOTH classes?

Quote from makloda:

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.

 

[makloda]

To get to the point: It is obvious that the Fed (representing the interest of creditors/banks) has ZERO interest in intentionally creating hyperinflation. It would massively hurt the interest of commercial banks it represents.

Actually, the Fed's member banks would get their heads handed to them on a plate in both giant deflation (waves of bankruptcies) and hyperinflation (worthless money owed to them).

Doesn't mean hyperinflation can't happen. Anything can happen. Just saying it would be against the best interest of the Fed's member banks as the trillions in debt of today's Dollar they're owned would be repaid with worthless paper money.

 

[endsongs]

Quote from Angrycat:

I hate to nitpick and all, but BHO managed to triple the budget deficit he inherited from the previous monkey in his first three months in office. So, pardon me if I don't buy the "poor barack inherited all this bad mess".

Check treasury direct.gov. The deficit under Bush in 2008 was $1T. The deficit this year will be ~1.9T. Keep in mind that many of the bailouts and Bush's budget for 2009 were already in place before Obama took office. Blame Obama for the 2010 budget deficit.

 

[makloda]

Quote from the1:

You gotta pay Uncle Sam, I have the majority of the interest up front, and you're trailor park trash. Homey, Economics 101 and Finance 101. Were you banging a bong during BOTH classes?

You have jackshit upfront. In our example hyperinflation kicks in AFTER you give me the $1,000,000 and I got the house.

You're running in circles with taxes and ammorization schedules, all this changes nothing in the example.

I got free money by ripping off the creditor (you). You gave away $1,000,000 in good money and after say 10 years you get back your original $1,000,000 plus e.g. 8% in fixed annual mortgage interest whereas the actual real value of the money you are paid back is a fraction of the original value assuming 50,000% annual hyperinflation over 10 years.

 

[Smart Money]

Quote from makloda:

You have jackshit upfront. In our example hyperinflation kicks in AFTER you give me the $1,000,000 and I got the house.

You're running in circles with taxes and ammorization schedules, all this changes nothing in the example.

I got free money by ripping off the creditor (you). You gave away $1,000,000 in good money and after say 10 years you get back your original $1,000,000 plus e.g. 8% in fixed annual mortgage interest whereas the actual real value of the money you are paid back is a fraction of the original value assuming 50,000% annual hyperinflation over 10 years.

Concur! And even if he sells the $3 million house, pays taxes on the profits, and pays off the note, he's still holding cash worth about what half a house costs. I'll take that for free. Might be nice seed money to move to Australia. When is it not a good idea to borrow money at 8% and earn 25% or 30% on it? It's freakin' awesome. Further...suppose one were to buy multiple houses and rent them out. Sweet! Tons of free cash...two half houses is one full house.

SM

 

[fail You re]

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.

While that's true consider the following:
1. The hyperinflation is still on so the money you pocket will quickly loose its purchasing power. So you will not really want to sell it. Why would you trade ahard asset for a bag of worthless paper?
2. To actually sell the house you'll need to find someone with $3 mil cash. Anyone who doesn't have the full amount will have to borrow the shortfall at the inflation rate plus sum spread so that he bank can make money. How money cash offers will you get today if you are to put the house on the market?
3. Note that the cost of utility bills, insurance, food, fuel and etc. will be increasing at the inflation rate (by the definition of inflation) while the increases in peoples incomes will always be lagging. The higher the inflation rate the larger the lag. So very quickly the majority of the population will barely have enough money to fill up their cars and buy basic foods. There will also be a few who won't have even that and many of those who are likely to get there first own at least one gun. What do you think a bunch of hungry desperate dumb people with guns are likely to do when they overhear you just sold a house and have $2 mil in your pockets?

 

[ASusilovic]

Quote from makloda:

I thought the middle class is bankrupt and is heavily indebted. If the Dollar is being destroyed the middle class will therefore make out like bandits as they can repay their trillions in household debt with worthless paper money.

In a hyperinflation scenario the big losers would be banks/creditors, not debt debtors such as the poor/middle class.

I want to be US middle class right now !!!!