What happens to debts during hyperinflation?
🗣️ DISCUSSION 💬
Just trying to wrap my head around hyper-inflation. If the US Dollar goes the way of the German Mark from 1923 and the USD is worthless what does that do to existing debts? If I could walk out onto the street and scoop up $500,000 from the gutter could I pay off my house? I'm sure the banks that hold the mortgages have safe guards in place to protect them. What am I not understanding?
In theory, the benefit of hyper inflation is that you’ll be able to pay off your mortgage and debts with nearly worthless paper money. In reality, you’ll get the worst of both worlds. As hyper inflation kicks in, your wages will remain stagnant for the immediate future as you struggle to keep your job and your company struggles to stay afloat. Immediately the cost of your interest payments will skyrocket. This will cause a great number of people to default if they haven’t locked in a rate. It will probably take a couple years of this before the printing press money reaches the average person. By this point they’d have lost ownership of everything they (thought they) owned.
Not financial advice, but If you think rates will skyrocket, then consider locking in rates on everything you can right now. Buy some gold/silver as a hedge to currency (physical metal, not paper certificates). Be stocked on food and other key supplies.
And by rates that means utilities as well if you can, I've already locked in my natural gas and electricity rates for the next three years when I saw how quickly they were rising at the start of this autumn.