U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Economics
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 03-03-2013, 01:43 AM
 
1,437 posts, read 2,013,538 times
Reputation: 569

Advertisements

I know nothing about economics. However, something sticks out to me.

The good side of hyperinflation is supposed to be that if you have debt like mortgages for example, you will be able to pay it down more easily using inflated dollars.

What I don't get is how you are supposed to pay with inflated dollars when I don't make any more money now than I did 5 years ago for example but am far more educated, have a much higher title, and have much greater responsibilities.

My point is, they generally aren't increasing wages now. Would they really increase wages alot during hyperinflation?

If not, then how will you have more money to pay down yesterdays debts?

Thanks for explaining.
Reply With Quote Quick reply to this message

 
Old 03-03-2013, 02:21 AM
 
64,675 posts, read 66,158,228 times
Reputation: 43102
plain and simple it is not a good thing. even the plain old high iflation we had in the late 1970's-early 1980's crippled things. equities died and 18% mortgages crippled real real estate.

it was not until inflation finally fell that things did well.
Reply With Quote Quick reply to this message
 
Old 03-03-2013, 03:25 AM
 
Location: Metro Detroit, Michigan
11,922 posts, read 13,256,416 times
Reputation: 12662
Quote:
Originally Posted by va_lucky View Post
I know nothing about economics. However, something sticks out to me.

The good side of hyperinflation is supposed to be that if you have debt like mortgages for example, you will be able to pay it down more easily using inflated dollars.

What I don't get is how you are supposed to pay with inflated dollars when I don't make any more money now than I did 5 years ago for example but am far more educated, have a much higher title, and have much greater responsibilities.

My point is, they generally aren't increasing wages now. Would they really increase wages alot during hyperinflation?

If not, then how will you have more money to pay down yesterdays debts?

Thanks for explaining.
You're talking about two completely different issues. If the demand for, and supply of labor remains the same and inflation kicks in, you will see wages rise relative to inflation. The situation we've had in the past decade is quite different. The demand for labor from 10 years ago to today has basically remained the same. We have also added some 30 million new workers to the labor pool. Since the supply of labor has grown, but the demand remained unchanged, this put downward pressure on wages. Many experienced wage stagnation, while many others experienced a sharp decline in their earning potential.

In the case of hyperinflation, wages would have to rise. Who is going to get out of bed for a days pay that doesn't cover the expense incurred getting to work? Of course, in such a circumstance, one would expect job prospects for the average worker to be rather bleak. Maybe employers will offer free job site room and board as an incentive?
Reply With Quote Quick reply to this message
 
Old 03-03-2013, 10:12 AM
 
17,749 posts, read 15,031,977 times
Reputation: 6377
Quote:
Originally Posted by va_lucky View Post
I know nothing about economics. However, something sticks out to me.

The good side of hyperinflation is supposed to be that if you have debt like mortgages for example, you will be able to pay it down more easily using inflated dollars.

What I don't get is how you are supposed to pay with inflated dollars when I don't make any more money now than I did 5 years ago for example but am far more educated, have a much higher title, and have much greater responsibilities.

My point is, they generally aren't increasing wages now. Would they really increase wages alot during hyperinflation?

If not, then how will you have more money to pay down yesterdays debts?

Thanks for explaining.


Most money is created by mortgage money, meaning that it reduces debt ponzi style for early adopters only. 70-80% of bank credits it from mortgages. We have been in the end of that run which is why people who recently purchases are not inflating their principle away.
Reply With Quote Quick reply to this message
 
Old 03-03-2013, 10:14 AM
 
17,749 posts, read 15,031,977 times
Reputation: 6377
Quote:
Originally Posted by mathjak107 View Post
plain and simple it is not a good thing. even the plain old high iflation we had in the late 1970's-early 1980's crippled things. equities died and 18% mortgages crippled real real estate.

it was not until inflation finally fell that things did well.
Everything you just described is from the point of view of creditors and rent seekers. The productive economy was doing just fine. The only thing that crippled us was the oil embargo and S&L scandal. .
Reply With Quote Quick reply to this message
 
Old 03-03-2013, 10:17 AM
 
64,675 posts, read 66,158,228 times
Reputation: 43102
Having lived that time frame in the work force and trying to pay bills i can tell you first hand your WRONG.

Unemployment was double digits, markets lost 40% in 18 months. Prices were killing daily life.
Reply With Quote Quick reply to this message
 
Old 03-03-2013, 11:53 AM
 
621 posts, read 547,414 times
Reputation: 265
Quote:
Originally Posted by gwynedd1 View Post
Most money is created by mortgage money, meaning that it reduces debt ponzi style for early adopters only. 70-80% of bank credits it from mortgages. We have been in the end of that run which is why people who recently purchases are not inflating their principle away.
The mechanism for inflation and hyper inflation differ. You run inflation on debt. You run hyper inflation on cash.


Everyone is still saying We want USD. When that change things will go bad fast. Printing money to meet our external obligations. That is what drove hyper inflation in post WWI pr-Nazi Germany. That is coming.


http://static.seekingalpha.com/uploa...ow_vs_gold.jpg
If you look at the 1970's and stagflation Vs. the 2000's and the housing bubble and valued in gold. You get a different picture of what went on.


Now we can intentionally drive hyper inflation with the minimum wage law.
Reply With Quote Quick reply to this message
 
Old 03-03-2013, 09:18 PM
 
17,749 posts, read 15,031,977 times
Reputation: 6377
Quote:
Originally Posted by mathjak107 View Post
Having lived that time frame in the work force and trying to pay bills i can tell you first hand your WRONG.

Unemployment was double digits, markets lost 40% in 18 months. Prices were killing daily life.
It did not last 5 years. And the 40% hit to the market is exactly what I meant. Securities are all liability side.
Reply With Quote Quick reply to this message
 
Old 03-03-2013, 09:21 PM
 
17,749 posts, read 15,031,977 times
Reputation: 6377
Quote:
Originally Posted by pie_row View Post
The mechanism for inflation and hyper inflation differ. You run inflation on debt. You run hyper inflation on cash.


Everyone is still saying We want USD. When that change things will go bad fast. Printing money to meet our external obligations. That is what drove hyper inflation in post WWI pr-Nazi Germany. That is coming.


http://static.seekingalpha.com/uploa...ow_vs_gold.jpg
If you look at the 1970's and stagflation Vs. the 2000's and the housing bubble and valued in gold. You get a different picture of what went on.


Now we can intentionally drive hyper inflation with the minimum wage law.

You don't seem to realize the actual scale of the German event. It is only coming to the US if we keep printing with no supply. It could go on for decades or more.
Reply With Quote Quick reply to this message
 
Old 03-03-2013, 09:25 PM
 
Location: The North
4,962 posts, read 8,681,984 times
Reputation: 3832
Hyperflation is a very special case which is quite rare. Understand it happens for quite different reasons than standard inflation. Countries which experience it are often bordering on being cut out of the world economy for a number of reasons. Often its a condition the government has almost willingly done out of spite or for special domestic political reasons, such as handing an enormous benefit to a small portion of the population like the rich who probably have extensive foreign holdings. Think Zimbabwe not that long ago or Germany in the 20s. Its one thing to think well we can inflate our way out of government debt, quite another mindset to say screw the world, we want you to regret ever loaning us a dime. To hyperinflate is a blatant intentional act, the alternative is just to say we can't pay and can we work something out as most countries do.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Economics
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2018, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top