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Say we have debt, and our monetary system completely goes to almost nothing. What would happen with our debt, how exactly would that work? Would the banks readjust the interest rates to really high prices to make up for the difference? Technically, if we owe 15,000 in student loans they can't turn it into 150,000, right?
not that the situation you described will happen realistically, but the borrowers win and the lenders lose in that situation. interest rates on a given loan usually take inflation into consideration, but obviously no one knows for sure what the future holds. if your interest rate is fixed then i dont think they could change it. no one would loan money for anything any more- thats for sure
Say we have debt, and our monetary system completely goes to almost nothing. What would happen with our debt, how exactly would that work? Would the banks readjust the interest rates to really high prices to make up for the difference? Technically, if we owe 15,000 in student loans they can't turn it into 150,000, right?
Fixed rate loans, such as mortgages, can never be increased, even if current interest rates go to 1000%. Nice thing about having a 30-year mortgage, as I never have to worry about it being jacked up on me - indeed, if inflation ever goes parabolic, I'd be sitting in some tall cotton, being able to pay back a vastly cheapened mortgage.
Things like credit cards, etc, however, will have very high interest rates, so better get them paid off before the hyper-inflation comes, or just default on them when they increase the interest rates to sky-high levels, which I suspect many people will end up doing if the rates skyrocket in a short period of time.
It is always better to pay off adjustable rate loans first. Credit cards and college debt falls into the latter category, so pay those off as much as possible.
If you have a mortgage that is fixed, they cannot by law change it.
So, if the economy goes to hell in a handbasket, instead of getting as much gold as possible, ... to be perfectly honest, if gold became the medium of exchange again, I'd invest more in bullets and guns, because our economy and society would have collapsed and I'd have to protect myself against folks who want to steal my stuff / kill me.
So, if the economy goes to hell in a handbasket, instead of getting as much gold as possible, ... to be perfectly honest, if gold became the medium of exchange again, I'd invest more in bullets and guns, because our economy and society would have collapsed and I'd have to protect myself against folks who want to steal my stuff / kill me.
Yeah, I personally don't think that the US dollar is going to go to being useless like some people have been predicting. I kind of just started the thread as more of a "what-if" type question.
I do agree with you though, investing in guns and bullets will be very smart if the US does crash.. but I just don't see that happening.
For better or worse monetary systems have never really collapsed. Local currency is still the medium of exchange only its accepted values change. Even in the Weimar days the local currency still was used, its just wheelbarrows were used to buy bread when a few months earlier that wheelbarrow might have held a lifetime's savings. So what your interest rates would be is entirely up to the contracts you signed to begin any loan.
I'd invest more in bullets and guns, because our economy and society would have
collapsed and I'd have to protect myself against folks who want to steal my stuff / kill me.
I love reading stuff like this.
Like someone holed-up in their home can hold up against the roaming mobs. It's not going to happen.
Such mobs have more guns, bigger guns, ammunition and are better shots than you.
The only way that gold or guns have any value is if civilization survives with police and law-and-order.
If they want to come for you and your family -- you're all dead. They'll take your gold. They'll take your guns. They'll eat your food.
Like someone holed-up in their home can hold up against the roaming mobs. It's not going to happen.
Such mobs have more guns, bigger guns, ammunition and are better shots than you.
The only way that gold or guns have any value is if civilization survives with police and law-and-order.
If they want to come for you and your family -- you're all dead. They'll take your gold. They'll take your guns. They'll eat your food.
You'll all be dead.
So true. Its like this anyways except the bullies come and people say here you can have some of what we have, just let us live. The bullies smile and shake your hand having taken your things without a fight.
Fixed rate loans, such as mortgages, can never be increased, even if current interest rates go to 1000%. Nice thing about having a 30-year mortgage, as I never have to worry about it being jacked up on me - indeed, if inflation ever goes parabolic, I'd be sitting in some tall cotton, being able to pay back a vastly cheapened mortgage
I do agree, but I think there is a false sense of security regarding fixed rate loans. If a homeowner/other gets behind on their fixed rate payments, the BANKS may force you to refinance @ a higher rate or a variable rate. In the end you can walk away, but you're not out of the woods.
Example: If a good, reliable renter has a 5 year lease @$900/month, & the market rate, via inflation, becomes $1500/month; guess what happens? The good, reliable renter is now considered a cost nuisance--bye bye costly, reliable renter. So you can jump in @ $1500+/month paying rent instead of owning a home.
This hideous financial ECONOMY is addictively greedy; it's wants to mop up any potential profits that may be out there.
Depends on what our creditors (China and Japan mostly) want to do with us. Let's hope it goes better than the Treaty of Versailles. My wheelbarrow isn't that big.
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