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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: pater tenebrarum who wrote (46214)12/11/2000 3:13:33 PM
From: eddieww  Read Replies (4) of 436258
 
"...as borrowers scramble to raise cash and increase their savings..."

Faced with deflation, yes. But how do you get deflation in the face of Fed easing and heavy printing?

For instance, my only debt is my mortgage at 7 1/8% fixed 30yrs. If my income can keep up with increased inflation I don't want to pay off the mortgage because my "real" interest rate is now lower. In fact, if inflation were to rise to, say, 8 1/8%, the mortgage lender would be paying me 1% for the privilege of holding it. -g- In fact, if I knew that inflation was coming, I would be wise to increase my debt level ahead of that and then repay with a debased currency. Whoever made the loan would be the bag-holder, wouldn't they?

Quick addition: The problem of citing Japan is that all of their debt bubble was internal, they were net creditors in a big way when the bubble burst.
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