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this all assume's that incomes won't increase at the pace of inflation, correct...?
Your income is the last thing to increase during an inflationary period, unless of course, you are the benefactor of receiving the newly printed bills before anyone else.
I guess I'll keep quiet then, because I must be one of the very fortunate few to work in a field where my salary is adjusted annually to keep up with the local costs of living...
Some people have such an employment contract, though price rises will outstrip the CPI rises unless you happen to do all the substitutions that the CPI uses. There's also the minor problem that could send your employer broke and leave you with no job, if their income doesn't keep pace with inflation. See California for a government example, and any random car or mortgage broker company for a non-government example.
But a large number of people will be unemployed. Another large number are self-employed. And another large number have jobs in which they don't get automatic pay rises due to inflation, but only get raises when they do a good job and the company is doing well.
You may be fine, though the lowering of the community's standard of living will effect you anyway - higher crime, etc.
I plan to be in the set of people who's income keeps pace.
fees are $750, which includes credit check and appraisal. (obviously you pay title and any escrow if necessary) believe me or not, i don't care. a friend of mine locked about a month ago on a 15 yr no point 4.625%. wiley has used them and she can vouch for the fees.
If you have such a good memory you should remember for a fact I said it after the collapse of Lehman. And in fact, I was correct, rates moved to 1 year highs after I said it. And don't worry, I don't believe you
If you have such a good memory you should remember for a fact I said it after the collapse of Lehman. And in fact, I was correct, rates moved to 1 year highs after I said it. And don't worry, I don't believe you
yeah well, tell us this. Where would home prices in NJ be today had Fannie and Freddie not been bailed out?
If you have such a good memory you should remember for a fact I said it after the collapse of Lehman. And in fact, I was correct, rates moved to 1 year highs after I said it. And don't worry, I don't believe you
i don't need a memory, the search feature on CD does it for me, LOL I only found 1 post of yours mentioning Lehman and it had nothing to do with rates.
So your 500K house today may still be worth 500K in two years, but that 20K Toyota you're considering buying today will cost 50K in two years, and your 500 dollar monthly utility bill will be 1K per month. If you can't see that this means the value of your house is collapsing, then it's not worth having a discussion with you.
One thing inflation will do is act as a "debt forgiveness" -- all those underwater home owners suddenly won't be underwater any more. Just as "debt deflation" is terrible for debtors, inflation is bad for creditors/bond holders.
In the long term, it makes it tough for the government to borrow money, because the government is ultimately "forgiving" its own debt at the expense of bond holders (including the Chinese) by debasing currency.
Credit tightening is inevitable, and they're doing their best to kick it down the road.
One thing inflation will do is act as a "debt forgiveness" -- all those underwater home owners suddenly won't be underwater any more.
Sure they will. The 500K house (with a mortgage of 600K) will still only be worth 500K even after inflation raises the price of everything else. Nominal home prices will remain flat; values will obviously fall.
Even high inflation is not going to make house prices rise -- at best they remain flat while inflation eats away at their value.
Thus, the underwater homeowner with a 600K mortgage on a house worth 500K today, will still be an underwater homeowner with a 600K mortgage on a house worth 500K tomorrow. (That is, if he hasn't wisened up and sent some jingle mail to his lender and simply walked away.)
Sure they will. The 500K house (with a mortgage of 600K) will still only be worth 500K even after inflation raises the price of everything else. Nominal home prices will remain flat; values will obviously fall.
Even high inflation is not going to make house prices rise -- at best they remain flat while inflation eats away at their value.
Thus, the underwater homeowner with a 600K mortgage on a house worth 500K today, will still be an underwater homeowner with a 600K mortgage on a house worth 500K tomorrow. (That is, if he hasn't wisened up and sent some jingle mail to his lender and simply walked away.)
Whether or not you believe that nominal prices will increase, inflation is a wealth transfer from borrowers to lenders, because it reduces the real value of the debtors liabilities.
Whether or not you believe that nominal prices will increase, inflation is a wealth transfer from borrowers to lenders, because it reduces the real value of the debtors liabilities.
if ever there was proof that people like L have an ulterior motive, it was that post
Whether or not you believe that nominal prices will increase, inflation is a wealth transfer from borrowers to lenders, because it reduces the real value of the debtors liabilities.
Not arguing with that statement. But your belief that stagflation will automatically make underwater homeowners less underwater is flat out wrong. They will continue to owe more than their homes are worth; stagflation won't change that.
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