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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: benwood who wrote (28522)	3/13/2005 3:46:59 PM
From: LLCF	Read Replies (1) \| Respond to of 110194

<DAK, my debt is only easier for me to pay back if I get my hands on more dollars, regardless of how worthless the dollar has become relative to other currencies.> Well, sure... if you lose your job and cant pay anything, you can't pay. You're talking about a depression in wages and hyperinflation in costs and even then it won't matter to the value of the loan {which is what we're talking about} because prices are formed at the margin; that loan you have out will be trading in the market place... and it will be trading for pennies on the dollar!! {{That loan could actually have the bulk of it's value coming from the right to take your house away and sell it! It could be worth more DEAD THAN ALIVE!!}} The fact remains, lenders will get wiped out as far as the value of the cash flow of the loan and the repayment of principal are concerned: When something becomes worthless it is defined as easy to come by! In a hyper inflation scenario you can make enough waitressing for a week to pay off your fixed mortgage of 5 years ago. I fail to see how ANY HYPERINFLATION SCENARIO DOESN'T lead to the falling value of a fixed stream of payments {bond}.... if there is a new textbook out there, I'd like to see the link. <That only makes it easy for a foreigner to buy my house.> No, much more. It forces the price of everything {domestic also} MUCH HIGHER world wide... that's inflation. Everything is more expensive and the lender can't raise his price! You could be able to sell your house for many X the mortgage value!! The lender will be sitting there twiddling his thumbs. <so we'd need some wage inflation just to keep up with buying the stuff to live> Exactly! Don't kid yourself... EVERYONE will be getting raises! Who is going to work if they can't buy a loaf of bread with a days wages? That's what inflation is... you'll be getting a raise weekly. <There may or may not be a surplus that makes it easier to retire the old debt.> Well, when they introduce the "gold backed eagle" in replace ment of the worthless dollar US at a rate of a trillion to one, you won't need much of surplus to repay the old debt. :)) See Germany in the 20's, the currency became worthless. You had to run to the store with your daily paycheck and see what you could get. DAK