But surely the hyperinflated interest due on that debt would kill you? From what I've read, in past cases of hyperinflation (and even high inflation), wage increases (at least early on) lag weeks and even months behind the offical interest rate rises.
not quite but close, started about 17 in january ended at peak this january at 31. if silver tops 60 dollars this year i think we can consider it a done deal and 2012 will be wiemar republic. unless miraculously all the keynesians become apostate and are enlightened in the wisdom of mises.
nope. the interest rates implicitly are lagging far behind the inflation rate in hyperinflation. that's the whole point that justifies the inflationary policy of the keynesians, in the tradition of shafting the lenders inflation works to secretly lower the real rate of interest, the very same problem that causes banks to think that in inflation a business is booming when in fact against the shifting sands of inflation they may well only be breaking even or even slowly leaking capital.
Regardless of how interest repayments are, the house that you borrowed for 350K could all of a sudden be worth 700K, so you only essentially owe the bank 350K. Atleast at this point you have a choice to keep paying the interest repayments (whatever they maybe, if you can afford them) or sell out , get your probably worthless 350K and move into the bush or forest atleast though you do have some money as a result of a real tangible asset you have , which is your house. Thats why some of the people are suggesting that you get into debt prior to hyper inflation (ie buy your metals on debt if you believe that we are going into hyperinflation). You buy 100 coins on debt, hyperinflation hits, you pay of the debt using only 2 coins, means you got 98 coins for nothing. BUT again only if you feel hyperinflation is on the way.... otherwise your in for pain. If you didn't own anything you couldnt even pay rent in hyper inflation and affording the basics may even be difficult. Hence is the reason why people in america are investing in silver, junk silver, PM's. So at least they do hold something of value.
The interest doesn't change on a fixed-rate mortgage. That is why the debt effectively becomes worthless in hyperinflation. IMHO, anyone who owns a variable rate mortgage is taking a huge risk. The point about AU vs. US housing is a very good point. Since, my house is in the US, I am going to take the risk. Regarding the definition of hyperinflation, I listed to one interview and the interviewee uses 25% p.a. Here are some of the definitions listed at Wikipedia under hyperinflation: "Definitions used vary from the International Accounting Standards Board's a cumulative inflation rate over three years approaching 100% (26% per annum compounded for three years in a row) to Cagan's (1956) "inflation exceeding 50% a month." [2] As a rule of thumb, normal monthly and annual low inflation and deflation are reported per month, while under hyperinflation the general price level could rise by 5 or 10% or even much more every day."
Going back to the OP, I sunk all my investment money into PM's when silver was below $20. They went down by, I think a dollar, almost immediately and as we know, not much movement for a long time. I fretted and fretted about the money I had "lost". Today? $28? 29$? $30? Who cares. Even at $25 I'm still well ahead. And there seems to be a floor to me. What will the people here be thinking who bought at 31, when other people are saying they don't want to buy at $50 because it was $45 a relatively short time ago? Will they be thinking "gee, I wish I'd waited for the dip"? Like has been said once you have been in for awhile and have made decent profits you stop thinking about it too much.
I can't see that hyperinflation is on the horizon for Australia. We have other black swans to worry about before that one I suspect.
I agree. You have better chances taking your money down to the casino than betting on that in Oz. I personally think it is unlikely in the US too. China on the other hand...
No doubt. It's what will drive gold and silver speculation. But there's a difference between inflation and hyperinflation. Ultimately, they always have the final resort of gold to go to, if they can't stabilise the paper system. The US is not Zimbabwe.
actually, it is gonna be zimbabwe. the US created world bank and its' SDR Bancor currency won't be so attractive without hyperinflation first up. i'd be willing to bet, in fact, that the world bank already has several hundred tons of this currency notes and coins already printed just waiting for the ben bernank to put a clamp on the money printing accelerator pedal. then the world bank comes out to the western world and 'saves' us from 'our' stupidity. the world bank can only do this in the situation of federal reserve insolvency. it may not happen this time, really depends on whether they have paid for enough of congress to vote to raise the debt ceiling, in the end it doesn't make much difference to them if they have to wait until 2012 when they get a new president... which won't be ron paul, there's no way they'll let him into the executive, mainly because he'd put a match to it figuratively speaking. i'm pretty sure i've read the trends right, 2011 it's gonna be food riots in the USA and australia and england and big parts of europe. martial law and hyperinflation tend to go together. charismatic new leaders then get planted in, the whole system is restructured to prevent a recurrance, which is basically going to be the end of national sovereignty and the beginning of global planned economy socialism. of course they won't be able to do that if the emerging trend of informed dissent continues in the same parabolic curve we are seeing in essential commodities. it remains to be seen how much of the western governments mercenary forces of police and soldiers will agree with their government when the big crunch hits. it will be a global event too, although europe is already far down the road, the rug is about to be pulled out from under us here in australia and the USA as well. let's hope that the tree of liberty's roots are firmly tied to the ground and that she is fed with mostly blood of tyrants hm on second thoughts, the global currency won't have notes and coins. it'll be 100% plastic and digital. SDRs are already traded around the place at the top of the banking establishment, gearing up to push them down the pyramid to us. but i'm not gonna use them, and i suspect they will have a much harder time convincing us all that we should use them as well.
It still surprises me that people who are opting to hold debt in that environment thinks the banks will just roll over and accept your liability reduced to zero through inflation. You'd be a fool to bet against the bank sitting back and just taking that lying down.
I just came across this article on Zerohedge, http://www.zerohedge.com/article/guest-post-strong-indications-gold-silver-shortages Gold and Silver is getting hammered, I havn't really focused on Platinum and Palladium over the past 2 months. To my surprise, they have gone up in price. I thought that platinum and palladium would suffer the same fate as gold/silver. I was wrong. 1oz Platinum is over 1800 USD. It just goes to show how much manipulation is going on in the gold/silver market. Slam
Sounds a bit conspiracy theory to me. Well, I think we agree on the part that they are thinking about it. You think there is some grand plan ready to go at a moment's notice and that the "plan" is for them to start hyperinflation, causing the problem for which they come in with the solution? Sounds like you've been listening to Alex Jones and co. Who are "they"?
the banks will just raise interest rates and tighten lending criteria again. and beg to the fed or the world bank, whichever is most appropriate, for funds to cover the losses off inflating currency killing short term loans. the long term loan market, mainly meaning mortgages, they are just foreclosing on the loans they knew would default, and for the most part will break even. when they know that they can go to the government for a bailout (for example, the debt ceiling raise is really another bailout) they are not so concerned about losses on their unsecured short term loan market as equity on mortgages, bailouts and rising prices on credit cards will keep them in clover plenty enough for their appetites. they pretty much can't lose so long as they can indirectly get their money by squeezing taxpayers through their agents, the government. also, the whole scheme of it is they want to have the economies go tits up, cos then they can go to all the fire sales and snap up assets at pennies on the dollar, further tighten the noose around taxpayers and further consolidate their system by moving the power up to the next stage of the world bank holding the position formerly held by the fed. what they are betting on is that everyone is gonna just cop effective tax rates of 90% and rising, moving precipitously close to outright serfdom. i'm not so sure that they'll pull off that coup, that remains to be seen. i know i'm not gonna bend over for it. i'm gonna vote with my feet and join the FSP and set about helping create a hardened libertarian enclave.
The current private debt balance of this nation is around 150% of our national GDP. One of the highest in the world today. 60% of the average bank's portfolio in this country is in residential housing loans. Do you really believe the banks will let that much of their portfolio be reduced to zero value through inflation? Shareholders will literally hang them. The theory is nice, but there's no way I'm going to believe it for a second this is how it'll pan out. Banks can just screw the borrowers and demand payment or forclosure. They either get their cash via insurance payouts or they get your house as an asset. Why wait for a firesale when they can just claim them in lieu of the debt already owed by mortgagees? There's a reason why they force mortgage insurance for those who don't have 20% down after all...
Mate, I just don't think you understand how society works. The rich elite of society stand on the shoulders of the rest of us. The better off we are, the better off they are. They also want us to be reasonably well off so that we don't get upset with them and try to topple them. You look at the Libs and Labs, they have a great deal. Just swap power every few years as long as there's no great disaster befalling the population they get to maintain their duopoly. Same throughout the West. You set up some major crisis, you risk losing all that power and privilege. Just plain stupid and these people, sure some aren't that smart but there's enough that are that understand this. Conspiracy theories about setting up a crisis deliberately to start some new order contradicts basic facts about human hierarchical societies. They don't want crises. They hate crises. They want the easy life sitting on top of the pyramid.
they are already closing the jaws on the long term credit market. the short term credit market they are tightening up. they only answer to the shareholders and shareholders get the first dip of the influx of new credit, so there's really no lose situation for them because the whole banking system marches in lockstep for the most part, except for the little credit unions and small independent banks. their real income is bailouts, inflation driven leveraged stock market speculation and money multiplier reserve banking. right now the average deposit/lender bank exposure ratio is almost 1:1. they aren't so much concerned about real growth just staying at the top of the pile so they can always buy more political clout whenever they want it, without being bid up further. the japanese stagnation is one way these things can go, and is the most probable and already happening now for the last 2 years, but the house of cards in derivatives is blowing over now so i don't really think they have any choice but to fall, and of course the world bank will come along to save the day. who cares whether your bank gets gobbled up when you are the favoured CEO, you'll get a top management position in the Party, as payment for your loyalty.
i don't disagree that there's a definite place for varying levels of wealth, but the operators in charge of those big international and central banking organisations have stated publicly that they want centralised managed economies with them as the oligarchs with us as the serfs, above us the management class which i am referring in my last comment as the Party. i know full well that minimal (if any) government and free market capitalism is the way we all really want to go, because it gives us the greatest amount of comfort and prosperity, but people are still stuck in a general opinion fostered by a largely left- and pseudo-right dominated media monopoly that wealth is bad which is why we have to have a progressive tax system, and breathing is bad, which is why we gotta have a carbon tax, and people with bad genes damage society so we gotta have a license to breed... if you don't think that there's people who seriously believe in this dream of global socialist centralised managed state you are in for a surprise. but on the other side of it, without any ability to properly calculate the costs of production a global socialist state will degenerate very quickly, if they even get it into power. my bet is they will, and there'll be 10 years of absolute disaster and finally we'll all realise what a scam the State is, nothing more than a con job run by a bunch of bloodthirsty psychopathic greedy wannabe monarchs who will fight over the spoils like a bunch of hyenas when they get what they want, showing everyone what they really are.
