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Assuming wages rise (they are), debtors benefit from inflation as their debts become less onerous in real dollar terms. Most Americans are debtors.
by ForHackernews 4y ago
Assuming wages rise (they are), debtors benefit from inflation as their debts become less onerous in real dollar terms.
Most Americans are debtors.
- bequanna 4y agoIn the short term, maybe. Also, you’re assuming debt has fixed interest rates and asset prices will continue to rise forever. Neither of those things is likely to be true in the medium term (~5 years). It’s complex. You can’t just look at high inflation in a vacuum without also considering that interest rates will rise (and possibly overcorrect) in response to high inflation.
- mc32 4y agoSo, Brazil had it good when they had high inflation because debtors... Wait... doesn't CC rates go up during inflationary times? But Ok, maybe we should follow the example of Brazil, right?
- bsaul 4y agoIt’s very different if your debt is in your national currency ( that will loose value if your country turns to shite), or in another currency. US can print money as long as it wants to pay its debts. It may have an impact on the interest rate for future debts, but at least it won’t default on the current ones.
- deleted 4y ago[deleted]
- Ekaros 4y agoHousing is pretty big counter-point for this. Everything is fine if you don't need to move, but if you need to you are unlikely to sell for what is left of your capital or be able finance with similar monthly payment. You are locked in your current house...
- chasd00 4y agoi think this would only work with fixed rate debt which narrows it down to home and, maybe, auto loans. However, there are variable loans for everything (including homes) and they're pushed heavily since there's more profit on a variable rate loan.