Your mortgage shouldn’t be a problem. Let’s say you have a fixed rate mortgage and pay $1500 a month on it. Well, with hyperinflation and a few paltry cost of living adjustments, you might find yourself earning $1000/hr. Now, given the skyrocketing price of bread, you may have trouble buying food for your family (at a mere $1000/hr, you may not earn enough to buy food) — but that $1500 monthly mortgage payment? Pfffttthh! Not a problem.
Don't think for a second that you'll get a "free house" out of this mess!
In 1923 Germany, most of the damage to owned real estate was caused by property taxes. The appraised values were raised mercilessly billions of times, causing people to abandon their homes and landlords to hand tenants the keys to their rented property. The increases and confiscations were tolerated because governments had to have something to pay police and firemen, who understandably refused to work without compensation.
Everyone should check their mortgage contracts now to look for the words “US Dollars”.
If it says “US Dollars or equivalent”, you need to try to get that changed.
Any new mortgages you get, you should INSIST on “US Dollars” only in the wording.
Otherwise, they can require you to pay it off in “reset” money.
While that sounds good, what it really means is the total value of developed American real estate - probably the largest store of wealth in the world - will become next to worthless. That’s a very bad thing for the future of the country...
Don't be so sure. In the 1930s, the Supreme Court invalidated the gold clauses in contracts. Today, the courts will likely protect the banks by adjusting the outstanding mortgage balance by the rate of inflation. You will still owe the same amount in "buying power" but your income will not keep up with inflation. So... your mortgage will become MORE expensive to pay off. Banks will be protected to "protect the system." You will not be protected. Be VERY, VERY cautious about relying on this theory to pay off debt. Variable rate debt will destroy you and fixed rate debt will be converted to variable rate debt to protect the banks... Better to be out of debt all together...
The first gallery rep I had was a very nice german woman
who told me her experiences of growing up during the Weimar
period.
She said during the time of hyper inflation she pawned her
fathers gold watch and paid off the family house note.
Great gal, she went to school near Peenemund and the
government used the students to do math problems for
the rocket program.
Very interesting lady.
Yes, but you or anyone else try to get another mortgage. No can do. There will be no mortgage industry henceforth.
Really? If you refi'd recently, check your mortgage and see if there's an escalator clause in it -- an "inflation" clause.
Bet you two old bottlecaps it's got one in the fine print.
You are right, inflation makes debtors wealthier and lenders poorer, some just cannot picture how it works. It also tends to make necessities cost a lot more while some luxuries become cheap. Those who have little or no discretionary income cease buying unnecessary items which reduces demand for such things and may cause the nominal price to actually drop while necessities like food skyrocket. Recent examples are such collectibles as Barbie dolls, I know people who were buying them as “investments” twenty years ago and now have a roomful of nearly worthless dolls still in the original boxes. They paid enough for one doll to buy lunch for a week and now need to sell a dozen dolls to buy one fast food lunch.