• "Spreading the ideas of freedom loving people on matters regarding high finance, politics, constructionist Constitution, and mental masturbation of all types"

Hyperinflation: Get out of debt ASAP...

Ebie

Midas Member
Midas Member
Joined
Apr 9, 2010
Messages
7,401
Likes
1,835
#1
Most of the experts who predict hyperinflation, also, recommend to pay of your debts/mortgage, before the hyperinflation.
That does not make sense to me.
In all the cases of hyperinflation that I have been able to check, those who had mortgages on their homes
were able to pay them off easily, after the hyperinflation started.
Why pay off the mortgage before the hyperinflation?
 

stAGgering

Site Supporter
Site Supporter
Seeker
Joined
Apr 11, 2010
Messages
960
Likes
723
#2
Yep, just have assets which retain value or income during onslaught of hyper currency devaluation.
Some... people maxed out their debt in 2007/8 and defaulted with millions of others.
If timing is correct one could perform the default again, this time with 10's of millions.
Must be an individual with minimal financial liability(house, car, govt loan) or willingness to dump and run.
Need to have savings outside banking system, which everyone must.
 

EO 11110

CENSORSHIP KILLS
Site Supporter
Mother Lode
Joined
Jul 31, 2010
Messages
14,506
Likes
11,271
Location
clown world
#3
pay off your debts, save your money -- relics of the past. it was good advice when real money was in circulation, but not now

the smart play is to NOT pay off (low int) debts and do NOT save what passes for modern money. instead, carry the debt and convert modern 'money' to other assets that go up with inflation
 

AguA

Seeker
Seeker
Joined
Apr 1, 2010
Messages
433
Likes
368
#4
It may all depend on the scenario faced.

Bankers, lawyers, politicians. These 3 make the rules of their game and we play in it. They never lose and if they do, you lost long before they did.

So say hyperinflation hits.
1. Can it become so bad that they legally enable themselves to foreclose on you at will or, to restructure your debt payments, i.e. increase your payment amount?

2. How secure is your income flow? Can you get laid off or (if retired, disabled, etc) have your benefits reduced by the .gov to the point you can't afford your mortgage payments anymore?

3. Let's say your mortgage stays at the same dollar amount as now. Can your income cover paying it as the price of everything else has now increased due to hyperinflation? Food, healthcare, fuel, utilities, etc.

Keep in mind, it's not inflation. It's hyperinflation. It isn't a slow creep up but a severe one.
 

BigJim#1-8

Silver Member
Silver Miner
Site Supporter ++
Joined
Mar 31, 2010
Messages
2,488
Likes
8,565
#5
I asked this a number of years ago & never got a definitive answer.
Like AguA says, the bankers won't be losers. I'm sure there's some fine print stating they can call your loan at their whim.
Waiting to pay off your mortgage & other debt with Zimbabwe dollars is a bad plan.....JMHO
Debt free is the only way to protect yourself & that might not work.....JMHO.
 

Wellsburg

Silver Member
Silver Miner
Site Supporter
Joined
Mar 31, 2010
Messages
589
Likes
944
Location
Southeastern PA
#6
If hyper-inflation actually occurs, won't your mortgage debt be easier to service since you are paying with grossly depreciated dollars?

Maybe your employer must double or triple your salary to keep you showing up for work.
If a gallon of gasoline goes up to $20, are you going to work for $15.00 per hour?

Maybe your 10 ounces of gold becomes worth $100,000 instead of $12,800 (today.)

Additionally, the banks cannot foreclose on millions of houses all at once. Who could afford to buy them at their new super-inflated prices?
There would not be sufficient buyers. Empty houses deteriorate quickly and banks hate owning real estate. Banks want the interest payments and solid collateral, not dead beat borrowers and depreciating collateral assets.

Like EO said above, saving money (dollars) is a relic of the past. Our real inflation rate is likely 7 or 8%, not the BS 2% seasonally adjusted core inflation rate the gov't. feeds us. (Which excludes taxes, food, and energy.) So, saving in dollars is a losing proposition unless interest rates increase substantially, which would put us in deep recession, or worse.
 

AguA

Seeker
Seeker
Joined
Apr 1, 2010
Messages
433
Likes
368
#7
If hyper-inflation actually occurs, won't your mortgage debt be easier to service since you are paying with grossly depreciated dollars?

Maybe your employer must double or triple your salary to keep you showing up for work.
If a gallon of gasoline goes up to $20, are you going to work for $15.00 per hour?

Maybe your 10 ounces of gold becomes worth $100,000 instead of $12,800 (today.)

Additionally, the banks cannot foreclose on millions of houses all at once. Who could afford to buy them at their new super-inflated prices?
There would not be sufficient buyers. Empty houses deteriorate quickly and banks hate owning real estate. Banks want the interest payments and solid collateral, not dead beat borrowers and depreciating collateral assets.

Like EO said above, saving money (dollars) is a relic of the past. Our real inflation rate is likely 7 or 8%, not the BS 2% seasonally adjusted core inflation rate the gov't. feeds us. (Which excludes taxes, food, and energy.) So, saving in dollars is a losing proposition unless interest rates increase substantially, which would put us in deep recession, or worse.

Income - Maybe your employer, if he's still exists, is inundated with applicants willing to work for less than you. After all, he really doesn't have any responsibility to you beyond the paycheck for your labor. Unless you're a niche employee. But how many out there are truly niche? As we say in the Army, no matter who you are, the big green machine keeps rolling, with or without you.

Metals/assets - Maybe the taxes on such grand increases in asset value increase just as grandly.

I agree banks don't want deteriorating homes on the books but, then again, isn't land the true asset?

Btw, I also agree that holding assets is better than holding dollars. And a home can be an asset with income potential when things get bad. Especially considering all those who will have assets to pay with when they lose their homes.

Serious question to anyone. How would a hyperinflation scenario in the US, several years long, be so different than all the others in the last 100 or so years of world history? What is different in the way our citizenry, not just individuals, would cope with it?
 

Goldhedge

Moderator
Site Mgr
Sr Site Supporter
Joined
Mar 28, 2010
Messages
41,777
Likes
65,932
Location
Rocky Mountains
#8
If hyper-inflation actually occurs, won't your mortgage debt be easier to service since you are paying with grossly depreciated dollars?
That's how the Government does it...
 

Mr Paradise

Midas Member
Midas Member
Joined
Dec 3, 2011
Messages
8,539
Likes
9,414
Location
Lake Superior
#10
Whoever dies with the most debt wins.

Doctor: Mr Paradise I’m sorry but you only have 6 months to live.

Mr Paradise: Hello VISA, I’d like to bump my credit limit up to $100,000 .....Thanks.

Mr Paradise: Hello Apmex, Yeah I’d like to purchase 20 gold buffalos, 20 AGE’s and 20 gold maples ....yep, just stocking up for the grandkids. My Visa # is ......
 
Last edited:

ttazzman

Midas Member
Midas Member
Sr Site Supporter
Joined
Apr 2, 2010
Messages
5,454
Likes
5,584
Location
mid-usa
#11
...my first comment is ....who are the winners in Zimbabwe and Venezuela.....it certainly isnt those with debt that used inflated currency to pay it off it didnt happen....

i have not followed the above closely but its my understanding that debt gets restructured...and currency gets restructured and replaced IE green dollars become pink dollars become orange dollars etc....they freeze bank accounts that have green dollars in it and force you to pink dollars and the pink dollars are not good for debt etc

the bankers never lose
 

Ebie

Midas Member
Midas Member
Joined
Apr 9, 2010
Messages
7,401
Likes
1,835
#12
If hyper-inflation actually occurs, won't your mortgage debt be easier to service since you are paying with grossly depreciated dollars?
e.
Yes it will.
At least that is way it happened in other countries that experience hyperinflation--from what I have heard.
 

Ebie

Midas Member
Midas Member
Joined
Apr 9, 2010
Messages
7,401
Likes
1,835
#13
...my first comment is ....who are the winners in Zimbabwe and Venezuela.....it certainly isnt those with debt that used inflated currency to pay it off it didnt happen....

i have not followed the above closely but its my understanding that debt gets restructured...and currency gets restructured and replaced IE green dollars become pink dollars become orange dollars etc.....
the bankers never lose
In the cases that I know of, there was a window of time for home mortgages to be repaid. I suspect that most people were able to take advantage of the time window.
 

Libertaurum

Freedom First
Platinum Bling
Joined
Apr 2, 2010
Messages
4,279
Likes
3,113
#14
Don't fool yourself. The bank never loses.

Hyperinflation is no fun for anyone. "Fixed" interest rates become adjustable as loans are called in, borrowers are unable to pay and must re-negotiate the terms.

Have you ever read every word of the fine print, glossary, appendix and addenda of every mortgage, car-loan, credit-card contract, lease, insurance policy and rental agreement you've ever signed that is still in effect?
Everyone who depends on an economy based on a currency that loses value will be affected, even PM holders.

When money dies, wealth creation suffers and commerce goes into a coma.
 
Last edited:

ttazzman

Midas Member
Midas Member
Sr Site Supporter
Joined
Apr 2, 2010
Messages
5,454
Likes
5,584
Location
mid-usa
#15
In the cases that I know of, there was a window of time for home mortgages to be repaid. I suspect that most people were able to take advantage of the time window.
I would suspect only those that had paper cash in hand at the right time would win in the senerio ....from what i understand they freeze bank accounts and convert your "good" currency to "new" but not good currency for existing debts.......so stacking your pillowcase with $ and wait for the right moment to strike ...then deal with money laundering issues....is kinda how i see it playing out...

but i really dont know ...just applying reason.....you just dont see normal people as winners on these things...
 

Someone_else

Gold Member
Gold Chaser
Sr Site Supporter
Joined
Mar 31, 2010
Messages
2,582
Likes
3,465
#16
Have you ever read every word of the fine print, glossary, appendix and addenda of every mortgage, car-loan, credit-card contract, lease, insurance policy and rental agreement you've ever signed that is still in effect?
Yes. I amended the terms for a sale for a house long ago. I almost signed up with a cell phone company, but after spending half an hour reading their contract, their system timed me out. F THAT! No sale. I NEVER sign anything before I understand and a agree to the terms. Sometimes I refuse because I don't have the time, like Apple's latest "upgrade". No. I do not consent. I will not read your latest terms. F Off!
 

ttazzman

Midas Member
Midas Member
Sr Site Supporter
Joined
Apr 2, 2010
Messages
5,454
Likes
5,584
Location
mid-usa
#17
Whoever dies with the most debt wins.

Doctor: Mr Paradise I’m sorry but you only have 6 months to live.

Mr Paradise: Hello VISA, I’d like to bump my credit limit up to $100,000 .....Thanks.

Mr Paradise: Hello Apmex, Yeah I’d like to purchase 20 gold buffalos, 20 AGE’s and 20 gold maples ....yep, just stocking up for the grandkids. My Visa # is ......

CORRECTION.... :)

Whoever dies with the most debt AND NO ASSETS wins.
 

Libertaurum

Freedom First
Platinum Bling
Joined
Apr 2, 2010
Messages
4,279
Likes
3,113
#18
I would suspect only those that had paper cash in hand at the right time would win in the senerio ....from what i understand they freeze bank accounts and convert your "good" currency to "new" but not good currency for existing debts....
That's correct, imo. That's when you see the long lines of people waiting for some bank branch office to open so they can get "their" money, as prices around them skyrocket out of control. If and when they do get "their" money out of the bank, it's worth a fraction of what it was.

Also, what you describe is the end of the hyperinflationary cycle, when "new" currency is introduced, usually backed by PMs in some way.

By that point, backing the currency, at least initially, becomes indispensable to give it credibility, since such efforts usually follow previous attempts at introducing "new" currencies or versions of the currency that failed instantly after being hyperinflated to oblivion.

...so stacking your pillowcase with $ and wait for the right moment to strike ...then deal with money laundering issues....is kinda how i see it playing out...

but i really dont know ...just applying reason.....you just dont see normal people as winners on these things...
So long as $=PMs, sure. Once any inflationary scenario begins, stacking fiat in your pillowcase will not make any sense at all. In such situations, everyone spends money as fast as they get it because it becomes a perishable product. Interest rates spin out of control. If that happens, keep only as many FRNs as you need in order to light a fire.
 

stAGgering

Site Supporter
Site Supporter
Seeker
Joined
Apr 11, 2010
Messages
960
Likes
723
#19
In the cases that I know of, there was a window of time for home mortgages to be repaid. I suspect that most people were able to take advantage of the time window.
Yes there is a window of opportunity.
However, fiat currency is not the lubricant for the transfer of wealth.
Gold and silver have been, in many instances.
Primarily due to the fact that they maintain purchasing power in the devaluing currency.
If an egg costs $1000, you'd better save millions in order to pay debt owed with currency.
Because to reach $1000 an egg, you would have spent $100,000 on an steak... six months before.
The opportunity is to have liquidity when the devaluing apex is met by the fiat currency.
If that takes two years, savings in currency will not exist.
So with assets such as gold and silver, producing farm, local manufacturing, one can transfer wealth
Not necessarily to pay off debt, but to purchase what has been devalued with the currency.
The assets which have been hit by deflation, are the target.
When the new currency is established, one may then sell the asset(s) and remove debt, or use asset to pay debt.
One must consider the market recognition of metals.
People will learn quickly, but banks and govt may remain deaf.
Many comments made saying banks never lose.
That is truly a farce.
Research bank failures, the resulting takeovers and debt ownership transfer.
You will still owe the bank, regardless of its name or address.
The trick is to maintain liquidity, gain deflated assets, now being PM's, and be able to pay bills for 18 months.
95% of the sheeps do not have that position.
Imagine just how cheap the Ferrari down the street will be.
Or the 45' sailboat in the river.
Maybe 120 acres of farm with 200 cows and a chicken barn full of hens.
Even better a 60 unit apartment complex.
Cheap, producing, and supporting itself, enough to make your debt be forgotten when you buy them with 500 oz of SILVER.

Saving what the bank is loaning, is not saving; it is serving.
 

AguA

Seeker
Seeker
Joined
Apr 1, 2010
Messages
433
Likes
368
#20
From firsthand experience, I have to add in...

When currency replacement occurs, what's in your bank account gets locked down (beyond your control) and converted digitally at whatever rate TPTB (.gov, central bank) determines.

Of the currency you have in hand, only 'x' amount of replaced paper currency will be allowed for conversion. The rest of what's in your pillow case is disallowed and becomes worthless.
 

AguA

Seeker
Seeker
Joined
Apr 1, 2010
Messages
433
Likes
368
#21
Many comments made saying banks never lose.
That is truly a farce.
Research bank failures, the resulting takeovers and debt ownership transfer.
You will still owe the bank, regardless of its name or address.

The trick is to maintain liquidity, gain deflated assets, now being PM's, and be able to pay bills for 18 months.
95% of the sheeps do not have that position.
Imagine just how cheap the Ferrari down the street will be.
Or the 45' sailboat in the river.
Maybe 120 acres of farm with 200 cows and a chicken barn full of hens.
Even better a 60 unit apartment complex.
Cheap, producing, and supporting itself, enough to make your debt be forgotten when you buy them with 500 oz of SILVER.

Saving what the bank is loaning, is not saving; it is serving.
The bold font above is mine.

You're technically correct re: bank failures. However, the bank name collecting his debt is irrelevant to Joe Blow. His debt will exist until paid off or forgiven. Therefore, banks never lose. That's what that phrase refers to.
 

ttazzman

Midas Member
Midas Member
Sr Site Supporter
Joined
Apr 2, 2010
Messages
5,454
Likes
5,584
Location
mid-usa
#22
The bold font above is mine.

You're technically correct re: bank failures. However, the bank name collecting his debt is irrelevant to Joe Blow. His debt will exist until paid off or forgiven. Therefore, banks never lose. That's what that phrase refers to.
Yes ..thx for that clarification...i made several comments to the effect that "banks never lose" but it was in the context of the OPs premise as a borrower....i am full well aware that banks fail but debt forgiveness is not something to bet the house on
 

Cigarlover

Gold Member
Gold Chaser
Sr Site Supporter
Joined
Dec 18, 2011
Messages
6,230
Likes
11,644
#23
No debt, grow your own food, life goes on.
If it all goes to shit then there may come a time when your cheapest assets becomes one of your most valuable. Seeds for your gardens. Fruit trees are also good. Neither care what the currency is doing and they just produce as long as there is sun, rain and nutrients.
 

Ebie

Midas Member
Midas Member
Joined
Apr 9, 2010
Messages
7,401
Likes
1,835
#25
From firsthand experience, I have to add in...

When currency replacement occurs, what's in your bank account gets locked down (beyond your control) and converted digitally at whatever rate TPTB (.gov, central bank) determines.

Of the currency you have in hand, only 'x' amount of replaced paper currency will be allowed for conversion. The rest of what's in your pillow case is disallowed and becomes worthless.
What country?
What happened to home mortgages?
 

AguA

Seeker
Seeker
Joined
Apr 1, 2010
Messages
433
Likes
368
#26
What country?
What happened to home mortgages?
Currency exchanges - late 2003, Iraq.
Hyperinflation - 1990's Yugoslavia hyperinflation. Secondhand family info so I don't know about the effect on loans there.
 

Uncle

Midas Member
Midas Member
Sr Site Supporter
Joined
Apr 13, 2010
Messages
1,500
Likes
1,725
Location
SA
#27
He who dies with the most debt.......

Only true if you can keep the debt out of your estate, or when you're single.

Golden Regards
Uncle
 

edsl48

Silver Member
Silver Miner
Site Supporter ++
Joined
Apr 2, 2010
Messages
2,450
Likes
4,590
#28
I would think that the only ones that would hurt by having a mortgage during times of rapid inflation would be those on adjustable rate mortgages and those with a relatively short term balloon mortgage planning on systematic renewals.
 
Joined
Apr 1, 2010
Messages
61
Likes
36
Location
Arkansas
#29
Hyperinflation should be good for those with mortgages, provided their salaries keep up with said hyperinflation. However, what I fear will happen is that most people have little in the way of tangible assets outside of their mortgaged homes. Inflation will increase faster than their wages, however it may fall short of the worst cases of hyperinflation. The net result is that those without other assets such as PMs and stocks will be losers. They still can't pay off their mortgages even after years of inflation because they have not savings and have not the discipline to save. Those who have hard assets might be able to come out ahead, or just stay even.
 

madhu

Silver Member
Silver Miner
Joined
Apr 2, 2010
Messages
1,081
Likes
811
#30
No hyperinflation as people don't have money. Why do you think the Lebanese minister was asking for financial help as their banks were going to crisis. Money not sufficient to go around. JMO all related to the low price of oil. Cash is king. Also even gold and silver might loose value as people cannot afford to buy, so the speculative rise of the metals will be gone.
 

Ebie

Midas Member
Midas Member
Joined
Apr 9, 2010
Messages
7,401
Likes
1,835
#31
Most experts say to get out of debt now, BEFORE hyperinflation sets in.
So, I pose to you 2 hypothetical situations:
A) $100K Mortgage + $200K in gold savings
B) sell $100K of the gold savings (now, before the hyperinflation), and pay off the mortgage (before hyperinflation)
= $0 mortgage+ 100K gold savings

The experts seem to be saying that situation "B" is best.
 

BigJim#1-8

Silver Member
Silver Miner
Site Supporter ++
Joined
Mar 31, 2010
Messages
2,488
Likes
8,565
#32
Most experts say to get out of debt now, BEFORE hyperinflation sets in.
So, I pose to you 2 hypothetical situations:
A) $100K Mortgage + $200K in gold savings
B) sell $100K of the gold savings (now, before the hyperinflation), and pay off the mortgage (before hyperinflation)
= $0 mortgage+ 100K gold savings

The experts seem to be saying that situation "B" is best.
I'm certainly no expert but I agree with "B".
Isn't the last line of that often quoted saying, "Debt is the money of slaves"?
I don't like debt......JMHO>
 

hoarder

Site Supporter
Site Supporter
Platinum Bling
Joined
Mar 30, 2010
Messages
11,886
Likes
12,747
Location
Montana
#33
Most of the experts who predict hyperinflation, also, recommend to pay of your debts/mortgage, before the hyperinflation.
That does not make sense to me.
Yeah, pretty well proves that all the ex-spurts are bankster owned.
 

engineear

Silver Member
Silver Miner
Site Supporter
Joined
Mar 11, 2011
Messages
1,996
Likes
2,399
Location
North of the Wall
#35
Sell gold BEFORE the hyperinflation?
Yeah. Wait till gold rockets to 5K an ounce THEN cash in to pay the mortgage.

Another good reason to have some smaller denominations of gold. Not many will be taking a 5K ounce for groceries, gas...small purchases. Then again, If it goes over 5K, are we shooting at that point? Civil issues kicking in? Time will tell.
 

BigJim#1-8

Silver Member
Silver Miner
Site Supporter ++
Joined
Mar 31, 2010
Messages
2,488
Likes
8,565
#36
Sell gold BEFORE the hyperinflation?
It's all hypothetical. I guess selling off Au to rid one's debt or waiting till hyperinflation & having to use the same pre hyper amount of Au to pay off the mortgage breaks one even. I don't believe for one second that one's loan balance will stay at the pre-hyper frn value.
Think of all the Au one could buy with the savings of the interest on the mortgage. Could be years of saving, could only be days.
 

AguA

Seeker
Seeker
Joined
Apr 1, 2010
Messages
433
Likes
368
#37
It's all situational dependent. Your situation.

For me, it's all about removing variables I can't otherwise control. I want the security of a house that I own. So, should the economy go sideways again, all I worry about is paying property taxes. Also, I don't want the bank going foreclosure crazy and, "mistakenly" or otherwise, deciding I suddenly don't own it anymore.

Don't think it would happen? Google the crazy foreclosures that occurred after 2008. Wells Fargo was one bank. BoA was another doing loopy crap as well. Your local hometown bank wouldn't mess up like that? Maybe not. But then, lots of smaller banks were eaten up by bigger ones.

You can sell Au or build savings or pay extra or whatever. Ultimately, you can't eat Au or Ag and you can't build a shelter out of it either. Well, maybe some of you can and I salute you.
 

Merlin

Gold Member
Gold Chaser
Sr Site Supporter
Joined
Mar 30, 2010
Messages
2,713
Likes
3,611
#38
Seems to me that you can walk away from the mortgage (mortgage = 0) and keep the $200,000 in gold. Sure, you'll have to go live with your uncle cause you lost the house. But so what?
 

Cigarlover

Gold Member
Gold Chaser
Sr Site Supporter
Joined
Dec 18, 2011
Messages
6,230
Likes
11,644
#39
Does anyone here with mortgage have a clause in it in the event of hyperinflation ? I cant remember ever seeing a clause in my older mortgages but its been awhile. I did read them as well and probably would have read some wonky clause like that but perhaps it was worded in legalese that i didn't pick up on.

The current house I bought was on land contract. pretty simple and definitely no clause for hyperinflation.
If there is no clause the banks have no recourse or capability to change the terms of the mortgage. There may be a clause in there for calling the loan due in full at any time however.
 

Son of Gloin

Certainty of death? What are we waiting for?
Gold Chaser
Midas Supporter
Joined
Apr 6, 2010
Messages
6,346
Likes
13,598
Location
USA
#40
However the whole inflation, hyperinflation, deflation, debt restructuring thing works out, there is nothing like the feeling of not owing any money to anyone. I know there will always be property taxes, but at least being debt free unshackles you from the banksters. It frees you psychologically and financially and makes it so much easier to live on less. It’s like walking out of a prison, or so I imagine.