I was thinking if hyperinflation were to happen due to excess money printing wouldn't those with debt such as mortgages benefit from hyperinflation? You could pay back debt with excess dollar and keep the property??
In the Weimar hyperinflation apparently the banks simply rewrote the debt after things settled down. I can't imagine the banks losing out just because their printing scheme failed once or twice.
i think the past 20 years is the best environment for inflation, where you got to pay off your debt now with cheap dollar. we dont want it to be like weimar conditions, as it is too quick, and no one can survive the mess.
Hyper-Inflation is bad all the time, but High inflation can be good time for bargain hunting if one is comfortable and have money to take advantage.
Look at Zimbabwe, they had hyper-inflation out the wazoo and eventually had bills that were in the trillions of dollars! These trillions of dollars soon became valueless and nobody benefited from that. Then they had to switch over to the US dollar in an effort to stabilize their economy. So no hyper-inflation is bad mmmkay. Which is also why I have been buying silver and gold in an effort to hedge against and possible downturn, this was my most recent purchase https://bullionexchanges.com/100-oz-johnson-matthey-jm-silver-vintage-bar
Theoretically, yes. Borrowers win and lenders lose due to a hyperinflationary event, particularly borrowers on fixed interest loans. The catch is that you'll have to be in a position to repay your outstanding mortgage when the time comes. Some considerations: 1. Initially the bank's interest rates will be skyrocketing in an attempt to maintain their margin above inflation (i.e. variable interest rates are basically pegged to inflation) so your monthly P&I repayments could double (or more) as the interest rate on your mortgage jumps from, say, 5%, to 25% or above. 2. If your bank collapses you will need to refinance at short notice. While your house value may have skyrocketed on paper relative to the outstanding mortgage, I would bet that any new bank will have stricter and stricter lending criteria making it harder for an average Joe to be able to access a new loan. This may therefore result in you having to default to your original bank and get kicked out of your house. If you can refinance, you will need to be one of the fewer and fewer people lucky enough to have a job whose pay rates are somehow keeping up with the hyperinflation (particularly without a long lag time) allowing you to pay the exorbitant interest rates and cost of living increases.
see us property 2008. everyone forget that happened 10 years ago. and nothing changed in the system, and we are almost back to the inflated price again.
i am seeing PM as another commodity in controlled by the system holder. i would hold 10% PM , 5% crypto, 10%cash 75% cash flow property. when people lost their job(downturn), the first thing will happen is they will sell everything that they have to cash, to keep roof on top of the head, to buy food, your gold and silver will be valued at spot -5% . how is g&s is going to save you ? imagine spot is down from where you bought 5 years ago. you would have lost immense buying power.
This is the best answer to all the BS constantly spew out by PM sellers and the always wrong reports writing pumptards.
I was in Indonesia from 1997-98 back then during the AFC. Inflation is relative. In terms of US dollars, prices were very cheap in Indonesia, but in terms of Rupiah, everything was expensive. A lot of poor people lost their meagre savings as banks closed after their owners ran off with the money. High end luxury property in gated communities might do ok as the rich need the security to protect themselves from the mob, but mass market property? you probably have to employ a guard to prevent looters from stripping away everything off that can be sold for scrap. Of course, the same can be said of gold and silver.
Perhaps because gold and silver inflate at the same rate as everything else. If you go into hyperinflation with 10 oz of gold and $250.00 cash after a year your $250.00 is scrap paper and your 10oz of silver at spot -5% is worth $25000.00. You don’t have to look for a cash buyer of that silver, you would trade it for goods or foreign currency.
Another great reason to pay out debt as soon as you can is that in a high inflation scenario people are forced to sell at pennies on the dollar and in these situations (as Ipv6Ready already mentioned) people with cash to spare pick up tangible assets at cheap prices, it’s how the rich get much richer in times of crisis. It’s why I urge people to get off welfare at any cost, get any job that they can and start saving something no matter how little, every week.
In my opinion, what is more dangerous to wealth preservation is stagflation combined with a government debt bubble. In a stagflation, property prices stagnate or fall with rapidly rising consumer prices. Governments increase property and consumption taxes to fund rising government debt and in a worst case scenario help themselves to bank balances over a certain amount. When it is dangerous to hold bank deposits and property, gold hidden under the ground will be a life saver. In 2009, North Korea forced a currency exchange in which citizens had to exchange old notes with the new currency, but each person can only change up to the equivalent of 100-200 usd. Bank deposits were automatically converted with similar limits. Anyone who holds dollars and gold, even small amounts of couple thousands, became “millionaires” overnight. Such a scenario can play out when the government has total power, such as in an autocratic regime.
well. the hyper inflation doesnt happen overnight. it does takes time, years... zimbabwe hyper inflation still going as we speak ? so if you dont have anything to help you with holding your PM. you will soon find out who is the one need to sell.
Specific remark about interest rates. It is said (alot times) that if interest rates would be raised by the central planning, that those in debt may end up being unable to repay the debt. But what with those loans at a fixed rate? I remember reading in recent years that, because of the current low rates, people massed up to change their variable rate loan to a fixed rate loan. Meaning that when central planners increase beyond that rate, these debt holders do not have to pay more. So NOT get into failure to repay the debt. I don't know which % of the (house) debt has a fixed rate plan. But if alot, the central planning may increase the rate pivot, without causing debt repay inabilities.
And another thing, that apparently very few people talk about, the post crisis / current rates are historically low, making sure bank depositors don't gain purchasing power in a low price inflation period and lose despite it, things may be different for the banking system orchestrated by the central banks, in terms of the cost of loans. While the loan rate doesn't differ exceptionally from the bank deposits rate, central banks increased their excess reserves balances, and inverted the definition of the loan rate between central banks and banks, resulting in a positive rate where the central bank actually pays its member banks on the loans that the latter take from the former. To make this clearer: it's like A lends his money to B, and instead of B having to pay A an intrest (the cost of the loan), A pays B an intrest, so B receives on top of the loans money, an extra based on the intrest. And this without a negative rate (which draws alot attention), so abit "undercover". In the US, in 2006, the laws related to the Federal Reserve, were edited as to make it legally possible for the central bank to PAY on the money it lends to its member banks. It was planned for 2011, but the crisis came sooner, and the legislation change was executed already in 2008, 3 years earlier than planned. And here sits the dirty trick, as mentioned above, the loan rate doesn't differ exceptionally from the rate that bank depositors receive, but the central bank increased the excess reserves of its member banks, so that a same intrest rate, is applied to a bigger figure, allowing the central bank to give more money for nothing to its member banks, despite the same intrest rate. So, people that deposited their fiatsavings at banks, receive a low annual intrest fee, but that equally low rate delivers the banks a higher (a function of the excess reserves total) annual intrest fee from the central bank. http://www.philadelphiafed.org/bank...src-insights/2007/second-quarter/q2si3_07.cfm Alot people wrongly state (maybe on purpose, to mislead, to make a false suggestion of high/hyperinflation to come) that the excess reserves balance is all new money that is brought in circulation / spent, so a price-inflation effect. That isn't true, it's only that intrest rate on the balance that the Fed pays its member banks. Not the balance itself is inflationary, the intrest on it is. To finish with that legislation change in a world context, other central banks in the world didn't need a legislation change to be allowed to pay on the excess reserves. The ECB for example, already was allowed to do that at its creation, but started to pay years after the Federal Reserve. The misleading element is, that at the Federal Reserve, a positive excess reserves rate equals central bank paying to its member banks, while the ECB does this with a negative excess reserves rate. So the 2008 crisis started with a Fed that gave bank customers/depositors nothing (zero rate interest rate ZIRP) but its member banks received first 0.75% and later 1.15%, to lower it near the end of 2008 to 0.25%. One may think, less fee for its member banks, but no, because the Federal Reserves Quantitative Easing's simultaneously (and dramatically) drove the excess reserves up, causing that "low" 0.25% actually deliver intrest fees much bigger than the previous 0.75% / 1.15%, and of course equally bigger relative to the bank customers depositors 0% (ZIRP). See https://fred.stlouisfed.org/data/IOER.txt And that's why I claimed several times here that the Quantitative Easing were way less than media (and pm dealers haha) claimed / suggested. It was even the opposite: Quantitative "Hardening". Placed in history: the US debt marketshare, and also EU, received huge sponsoring from their central banks, causing the housing boom, causing prices of houses and commodities to double triple and more, over the 2000-2007 period. In central planners terminology: "overheated". And then the central banks switched to braking. From expansion to contraction, resulting in the so called "The Great Recession". And it worked, the central planning mislead alot bank deposit holders in such a degree that these feared high/hyper inflation, and fleed their money to a variety of markets (alike our pm's here) and stock markets. The pm market already busted (though not completely yet), stock market is next. And that latter is what to come: a huge stock market crash. Huge, because in meantime the stocks were driven up to double the historical peaks. Less (?) than a decade to reach that level, probably less than a year to "materialize" the so far unseen losses. One can easily predict the media: "X billion dollars vaporized on stock markets in a single day". In reality, these didn't vaporize, they got spent, by selected people that will not pay back fully (due to the intrest rates manipulation), during the years of the boom. Not at its end, not on the Black Days. Yea I know, I again wrote an essay here.
Since end 2015, the Feds interest rate on excess reserves https://fred.stlouisfed.org/data/IOER.txt, after 6 years stagnating at 0.25, is increasing. On 2018-07-23 it was 1.95. One may think that its member banks now receive way more intrest fee on their excess reserves. But no. Because the Fed simultaneously (end 2015 start increase of rate, end 2015 decrease of total) lowered the https://fred.stlouisfed.org/data/RESBALNS.txt balance, the total on which the intrest rate applies. Over the years, I calculated a kinda own balance, named "NetBase", being the REAL inflationary (= gets into circulation) part of the Feds total. 2008 BASE 2008-07-30 876.411 RESBALNS 2008-08-01 10.454 EXCRESNS 2008-08-01 1.875 > NetBASE (BASE - EXCRESNS method) 874.536 2013 BASE 2013-10-30 3628.139 = 2008 x 3.14 RESBALNS 2013-11-01 2463.012 = (-RESBALREQ) RESBALREQ 2013-11-01 70.483 > NetBASE (BASE - RESBALNS + RESBALREQ method) 1235.610 = 2008 x 1.41 2014 BASE 2014-10-29 3975.812 = 2008 x 4.54 RESBALNS 2014-11-01 2519.578 = (-RESBALREQ) RESBALREQ 2014-11-01 86.424 > NetBASE (BASE - RESBALNS + RESBALREQ method) 1542.658 = 2008 x 1.764 2015 BASE 2015-01-07 3941.005 = 2008 x 4.54 RESBALNS 2015-01-01 2683.709 = (-RESBALREQ) RESBALREQ 2015-01-01 90.522 > NetBASE (BASE - RESBALNS + RESBALREQ method) 1347.818 = 2008 x 1.59 2017 BASE 2017-06-07 3832.048 RESBALNS 2017-06-01 2206.547 RESBALREQ 2017-06-01 118.187 > NetBase (BASE - RESBALNS + RESBALREQ method) 1743.688 = 2008 x 2.06 2018 BOGMBASE 2018-06-01 3650.525 BASE 2018-06-06 3714.067 RESBALNS 2018-06-01 1988.224 RESBALREQ 2018-06-01 125.503 > NetBase (BASE - RESBALNS + RESBALREQ method) 1851.346 = 2008 x 2.18 We can see here, that after "Hardening" (own term ) the Federal Reserve is gradually "Easening" again. With 2015-2016 as pivot. Not a coincidence - exactly when the intrest paid on excess reserves started to rise, and the excess reserves - the biggest component of the grand total of the Feds balances, started to drop.
Zimbabwe finally demonetized their national currency in 2015, and now use the US Dollar as the nominal unit of account. Source: http://web.archive.org/web/20150711113239/http://www.rbz.co.zw/pdfs/Public Notices/2015/Demonetisation Press Statement 9 June 2015.pdf There is is a chronic shortage of physical US Dollars in Zim so the government strong-armed one of their major banks to issue non-currency "bond notes" nominally backed 1:1 by US Dollars in deposit. Locals call it the "bollar", and bollar notes trades at a discount because even the issuing bank won't (can't?) exchange bollars for physical US Dollars. So three prices are quoted for even everyday transactions: US Dollar Cash Price (Lowest) Bollar Price (Higher) Debit Card Price (Highest) Traders who import basic goods find they need physical USD or another 'hard' foreign currency to pay their foreign suppliers. Source: http://www.economist.com/middle-east-and-africa/2017/02/18/zimbabwes-new-bond-notes-are-falling-fast
