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Old 10-25-2008, 12:35 PM
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Default hyper inflation loans ?



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If we had hyper inflation here in the US, what would happen the peoples house loans ?

Would you be paying off your loan with the higher wages hyper inflation would bring or
do you think that all loans would be adjusted to reflect inflation, in the banks favor?

In my opinion, it would be easier to pay off the loans later when theres lots of dollars in the street, rather than when money is tight.

whats your take on this?

Last edited by Farm boy; 10-26-2008 at 10:17 AM..
Old 10-25-2008, 01:18 PM
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I'm wondering the same thing.
Old 10-25-2008, 01:32 PM
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you would if ya had a fixed rate loan - ya would end up payin it off for same amount of dollars but w worthless dollars

an adjustable would kill ya cause interest rates would rise as well.
Old 10-25-2008, 01:42 PM
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I was wondering the same thing, would mortgages and credit card balance get grandfathered in? Probobly not. I think that there would be a note along with your payment stub instructing you to adjust payment for hyperinflation. Please remit your payment by using the following calcualtion regular scheduled payment 1200.00 current currency value 1$ = .10 so 1200/10 = 12,000.00 Please remit your payment of 12K and HAVE A NICE DAY. I think it would work something like that.
Old 10-25-2008, 07:49 PM
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Quote:
Originally Posted by Henrygt View Post
I was wondering the same thing, would mortgages and credit card balance get grandfathered in? Probobly not. I think that there would be a note along with your payment stub instructing you to adjust payment for hyperinflation. Please remit your payment by using the following calcualtion regular scheduled payment 1200.00 current currency value 1$ = .10 so 1200/10 = 12,000.00 Please remit your payment of 12K and HAVE A NICE DAY. I think it would work something like that.
This wont happen without some kind of legislation to make it legal as they would essentially be changing the terms of the contract that you have and they currently cant legally do this.

Now, having said that, I wouldn't be shocked to see some kind of legislation passed to create some kind of calculation such as this, though I would think that would (or should) be political suicide for anyone that supported or voted for it.
Old 10-25-2008, 09:12 PM
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Taxes! Taxes! Taxes!
Old 09-08-2010, 11:28 PM
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You could pay off the loans with worthless dollars until they revalued the dollar and produced a new currency. Then all financial instruments would be revalued on the same scale. Best to pay off debt in worthles dollars as fast as possible on fixed assets you want to keep and ignoring the credit cards. Start with the highest variable rate loans until all of the variable loans are paid off, then pay off the fixed rate loans. Look for interest rates to skyrocket before they take the drastic step of revaluing the currency.
Old 09-09-2010, 12:05 AM
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Quote:
Originally Posted by jcb_chuck View Post
You could pay off the loans with worthless dollars until they revalued the dollar and produced a new currency. Then all financial instruments would be revalued on the same scale. Best to pay off debt in worthles dollars as fast as possible on fixed assets you want to keep and ignoring the credit cards. Start with the highest variable rate loans until all of the variable loans are paid off, then pay off the fixed rate loans. Look for interest rates to skyrocket before they take the drastic step of revaluing the currency.
I am thinking that "they" would be too busy being looted or trying to buy food to revalue the currency. I think it would be more likely that the "old" currency goes away, is replaced with a barter economy, and there would eventually be a form of precious metal as currency.
Old 09-09-2010, 06:24 AM
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You're not seriously suggesting that, in the United States, bankers would get screwed? Obama has shown that he has no respect for our laws and I'm sure would try to change them to accommodate his backers.
Old 09-09-2010, 07:27 AM
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Fixed rates would stay fixed

Adjustable rates would adjust

Rates move all the time, hyper inflate or deflate does change the terms of a loan contract.
Old 09-09-2010, 07:29 AM
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I'm not so sure it would work that way . . .

Fixed rate mortgages maybe, but anything with an adjustable rate (ARM's, most credit cards) would probably adjust the interest rate to help recoup their money. The Fed prime rate would be astronomically high during such an event, it's the only way they can try to combat a massive devaluation of the dollar. Credit cards and ARM's will adjust with it.

Besides, it's not like during hyper-inflation you just have tons of extra cash, remember the "cost" (in dollars) of everything else goes up too. Gas, groceries, your utility bill . . . and you're assuming that employers will raise wages as fast as the dollar loses value, probably not gonna happen. More than likely we'll all be getting paid at a rate less than we are now, in adjusted dollars.
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