The way I look at it, high rates of inflation incentivize debt. If I can borrow at %4 a year (much more than the federal reserve charges, for instance) and the

The way I look at it, high rates of inflation incentivize debt. If I can borrow at %4 a year (much more than the federal reserve charges, for instance) and then deploy that money productively, I can use the proceeds to pay down the debt with much cheaper money. So, if I thought the rate of return made sense, I could borrow dollars on my credit card, buy Apple, Google or Facebook stock, and then pay back the loan on the dividends or returns from the stocks appreciation. This isn't even necessarily irresponsible if, say, you bought Berkshire Hathaway, which has historically returned >%20. If it continues to do so, even a credit card rate of %13 will give you a %7 spread. This is a simple example of leverage and is effectively the same as trading stock on margin. But, I'm sure everyone reading this realizes the danger- Buffet may die, BRK might flatten, any of those tech companies might not return what I expect. That's the risk of leverage. So, in short, inflation incentivizes the risk of leverage. And that's exactly what we saw in the housing bubble where people with $60k in income were buying 4-5 $120k condos hoping to flip them in a few years.