With Hyperinflation Borrowers Win Big Tme.

by OracleofMN
(Independence, MN )

When interest rates go up borrower's win, therefore with hyperinflation, borrowers win big time. This is true to the extent that your fixed rate mortgage payment will get smaller and smaller in nominal terms. e.g When the price of a loaf of bread is $500 your mortgage payment of $1000 will seem very insignificant. However, since real estate is mostly a highly leveraged asset i do not think it will increase at the rate of inflation, i.e you will see weakening demand for loans when rates are at 20%. Of course this weakened demand will be partially offset by the decline in the value of the dollar.

Invest in Gold and other storable commodities and you will be able to pay cash for your next property.

We have the strongest and largest economy in the world with the world's reserve currency. Hyperinflation isn't going to happen here.

I am sure the people in the weimar republic thought that it couldnt happen either.

Just my thoughts.

Phil

"Paper money eventually returns to its intrinsic value -- zero." Voltiare