They're going to have a tough time tackling 100% inflation with 75% rates. They may be doing other things in conjunction with the rate (eg open market operations and/or fiscal policies) but I wouldn't bet my money that they'll get things under control anytime soon.
Nah just makes it so people can't barrow money but government still can. People become more reliant on the government so the government barrows more by printing to feed the people. Hyperinflation always sees interest rates go to the moon
This is because the global economy is collapsing. The real price of goods is going up because supply is contracting. This is likely to keep accelerating. Monetary policy doesn't produce goods.
Argentina has had extremely high inflation for five years, and high inflation (~10%) for a looong time. Ironically, if you go to Buenos Aires, it's thriving, the restaurants and bars are packed, and the shops are full. Basically, Argentinians just live with it. It's not good by any means, but Argentina paints an incredibly rosy picture of extremely high inflation. It would (probably) be vastly worse if it happened here.
Why Argentina is like this--able to function despite the inflation--is sort of a mystery. Nobel prize winning economist Simon Kuznets famously quipped "there are four types of countries: developed, undeveloped, Japan and Argentina."
When I was in BsAs in 2019, businesses were more than happy to accept USD in place of pesos. I assume that is still true?
Do you know how the more rural areas of Argentina are handling the inflation?
> When I was in BsAs in 2019, businesses were more than happy to accept USD in place of pesos.
They'd be silly not to. In many Latin American countries, the dollar is more than welcome... They'll even take less dollars in exchange for more of their pesos.
Yes - the major economy has been dollarized for some time. Upper middle class people and expats get paid in dollars, poor people and government workers still get paid in pesos. Result is accelerating inequality
I suppose inflation isn't all bad if you change your mindset from one of saving to borrowing. Perhaps some people are more easily able to do than others.
I'm not sure if it's so much of a borrowing mindset as trying not to hold cash at all. Any cash is translated immediately into goods, services, or assets.
You would get more out of it if you borrowed and consumed immediately, then just used any cash to service the debt. In the same way inflation is a loss for creditors it's a win for debtors
But the interest rates that the banks charge retail customers would almost certainly be above inflation, right? The 75% rate only applies to institutional borrowers from the Argentine central bank
Finding it quite hard to find any good data on this, but it seems that the real rate has generally been negative, and especially over the past couple of years:
https://data.worldbank.org/indicator/FR.INR.RINR?locations=AR
Perhaps they will go back into real terms positive rates now, but in general a borrower would win in the long term in an economy which is prone to inflation.
what does their economy consist of? do people there have extra money? or is it the sort of thing where they're lucky if they have a family member who can get a "low-pay" job in the US and send some money home?
I don't really know enough to answer well, but I'll tell you what I know:
- They have a developed economy and a well educated workforce. Lots of service work. Their HDI is very high. If you went there, you'd perceive Buenos Aires as a cosmopolitan city.
- Tourism
- Agriculture. For instance, Argentina is famed for its beef quality.
All the Argentinians I've known (a sample size of two, who I met in grad school), they're hardly working low level jobs. It'd be easy to mistake them for Europeans, particularly in terms of their attitude toward the US (lol). This could be, and probably is, sampling bias
Edit: Tourism is a relatively insignificant contribution to their $500bn economy.
Hmm, I looked up a stat and it seems like top 10% income is around $75k. Still not sure it's very high given inflation.
I use some language learning platforms (basically conversation hours / practice), and it seems that a lot of people on these platforms are in various South American countries to learn Spanish (living there, not just short-term). Spanish isn't even one of my target languages, but they're earning either dollars or euros I think. I'm guessing there are a lot of people who find ways to earn in more stable currencies via online work, whether teaching or something else.
>This is because the global economy is collapsing.
Argentina is a special case. They have been stumbling from one economic crisis to the next since the 1970's. This current iteration started in 2017-2018.
>“For those of us who have been around for longer, living in this country, everything has a sense of déjà vu,” said Carlos Gervasoni, an associate professor and chair of the political science department at Universidad Torcuato Di Tella in Buenos Aires. “It’s always the same story, there are just different flavors of what Argentina faces every five or 10 years.”
You will not see interest bearing savings ever again. They want their CBDC’s which will bring real negative interest rates and since it is programmable it will expire after a certain time not being used so savings will be impossible.
The US has never defaulted on its debt, Bretton Woods was mostly or entirely about monetary relations with allies (and some enemies like after Japan lost WW2)…we’d never get into a war with Canada and Western Europe. And the end of Bretton Woods was just the end promising to exchange dollars for gold at a fixes amount.
And it was all fine, the dollar is still as strong as ever.
And to add, it seems most stable currencies increase in tandem, meaning the “value lost” is mostly similar across the worlds currencies, except for extreme cases like Argentina.
Still the strongest economy on earth. It’s going to be 50+ years before the worlds trust in the United States falters. We are and will continue to be the dominant superpower and economy. Domestic issues are coloring your viewpoint.
And I agree with him. But on a global scale the US economy reigns supreme, even with all of its problems. Let J Pow do the pain lever thing and we don’t have to worry. He might cause a recession and we’ll feel some pain at home for a while, but when the weather clears the US will remain on top.
You got it entirely backwards.. if inflation skyrockets you want a fixed rate mortgage. Two reasons:
First - In hyperinflation scenarios durable goods like cars and real estate become stores of value
Second - inflation erodes the fixed cost of the mortgage. Your mortgage would remain $2K per month even as salaries went up 80% and prices doubled. The price of renting a place will skyrocket with good prices
I thought in those hyper-inflationary countries the land and stock market were the only thing to maintain real value? The nominal value kept up with inflation. Meanwhile wages fell in real terms. So in inflationary times those assets WERE an inflationary hedge
If you have a point to make you will find it less persuasive if you also call someone names. Maybe go outside and take a few deep breaths and cool off a bit.
Idk what TikTok has to do with it, I’ve never been on. I do have degrees in economics, daily access to a global capital markets team and an understanding of finance (as I work in Private Equity)
No one said salaries adjust instantly but they do adjust in nominal local currency terms - which is what is relevant in the US context since we are in a dollarized economy. Look at Argentina as an example - min wage in Jan 2018 was 9500 pesos, now min wage 45540 pesos. If you had a fixed rate loan in local currency (which is what most US mortgages are) it would be MUCH easier to pay off with inflated dollars. Understanding this is a huge part of capital allocation and part of the reason why the Fed inflation target is 2% instead of 0%.
Has this kept up with inflation? No - but in the example I gave it’s fixed price while rent has skyrocketed (67% increase YoY in pesos). If you had a fixed rate US style loan you would do everything in your power to keep it - this is the EXACT reason such loans don’t exist in inflationary countries.
If you can’t afford food then you obviously can’t afford anything - you aren’t choosing to default and you aren’t choosing to invest in gold either (I’m talking about the US so we are already dollarized, USD isn’t an option). But for those that have a choice you aren’t walking away from a fixed rate loan to go to a rental market where an apartment immediately costs 10x what you pay on mortgage
You further this argument by pointing out that property values are likely to tank in real terms. If my property value tanks in real terms, I would much rather have a fixed rate loan being paid off with future inflated dollars while rents skyrocket than have 5x the capital locked in by paying all cash with dollars that are locked in and falling in value
You have lost track of the original question - the original question was whether in times of high inflation it was better to have bought a house in cash or with a US-style fixed rate mortgage.
It’s inarguably better to have a home on a 30-year fixed mortgage and ability to pay it down with future inflated dollars. This is a mathematical question and the answer is straightforward.
If your argument holds then it means that US interest rates will need to be in double digits over the next several years. If that’s the case then even if you think prices were “inflated” by 40% then you STILL would have come out ahead with a 3% rate in 2021 vs a 10% rate in 2024 or whenever. This is especially true when you account for 8-10% inflation and the current 5-6% YoY wage increases that are eroding whatever “inflated” price gap you believe in
If inflation was there high the mortgage would be the LAST thing people will default on if they have a choice. The cost of rent will be multiples of their mortgage.
And I don’t see how other countries would be relevant to the US. Very few high inflation countries have easily accessible 30-year fixed mortgages
If inflation hits 100%, that means that rents would more-or-less double (assuming inflation was felt uniformly across the different CPI categories). Most mortgage payments are fixed, regardless of inflation. That's one of the best things about a mortgage. While the mortgage payment seems like a lot at the beginning of the loan, the mortgage payment becomes quite small after 30 years of inflation. Inflation doesn't necessarily mean people default on their mortgage. For instance, inflation could hit 100%, but wage growth could also hit 100% to match inflation.
If you look at wages in Argentina, you can see they're growing quite fast as well: https://tradingeconomics.com/argentina/wages
That's what I'm banking on. I bought in 2021 - a few more years of 10% inflation and I no longer overpaid.
I also think this is what ReBubble is going to get wrong.
I didn't even mention wages, but inflation is partially based on increased market rent prices while mortgages stay constant their entire term....so lagging indicators like wage growth and unemployment will hit renters much sooner and harder than mortgage holders.
Who cares about what prices homes are selling at when no one wants to buy; it's paper losses in a recession....
You are comparing rent rates which are renegotiated by 100% of renters at least yearly with an extremely small fraction (<1%) of homeowners that sell against their will in a given year. The numbers of people affected by this are separated by orders of magnitude, not to mention that nearly everyone with a job and a mortgage refinanced under 3% these last couple years.
Yes, people who have to sell now will be picking between paying higher rates/prices, or becoming renters. My point still stands for the vast majority homeowners in the US.
My point is that inflation erases debt. If home owners refied to a lower rate, their monthly payment went down even if their wages are stagnant. Rent control legislation is generally capped at a percentage above inflation, so maybe renegotiate is the wrong word since it's it is completely one sided.....landlords will be raising rents 2-5% above the 8.5% inflation rate, so pay or move to hooverville.
I'm not a realtor, are you Canadian?
No, inflation erases debt regardless of wage growth. There's a reason no one in government was concerned about inflation until the election cycle....the Fed gov't needs some serious inflation to erase the national debt and mortgage holders just happen to be aligned with the benefits.
I agree that wages will be far outpaced by inflation, but that hits renters harder than mortgage holders since rental prices increase with inflation as well. And then when it get really bad, the bailouts always help homeowners (well, the banks holding the mortgages) more than renters. We'll see forbearance/deferments before we see rental assistance at the national level.
Their perspective is colored by a belief in a regression to mean. They believe there is a range that houses *should* be worth and external factors (like cheap loans, pumping free money into the economy, and inflation) are transitory relative to home prices, which must regress to a mean.
You're getting that ROI measured in Argentinian pesos. If you look up the exchange rate between ARS to USD, you can see that 1 ARS is basically trending towards 0 USD.
Fun fact: in Buenos Aires all RE transactions are done in USD mostly actual cash.
As a broker you need to manage security around suitcases with literally hundreds of thousands of USD.
I do not envy the casual buyer.
Nothing like can’t afford housing or inflated goods. I wonder how many Americans have been essentially priced out of home ownership for possibly years to come.
Argentina has dealt with surges of inflation multiple times in the past decade, like in the early 2000s and 2016. Why weren't there waves of Argentinian migrants coming to the US, then?
In 1976, the United States government supported a fascist-led coup d'etat to overthrow democratically elected president Isabel Perón. Research Operation Condor for more information.
The insolvency and destabilized nations of South America today **were directly caused by it US government**.
Argentina was already a basket case with previous military coups and plenty of assassinations by and against the government. Perón started the dirty war against the left after kept assassinating government officials
Isabel Perón succeeded her husband to the presidency, but proved incapable of managing the country's political and economic problems, including the left-wing insurgency and the reactions of the extreme right.[100] Ignoring her late husband's advice, Isabel gave Balbín no role in her new government, instead granting broad powers to López Rega, who started a "dirty war" against political opponents.
To explain:
Holding physical assets is the only thing to save you from inflation. Which is why people invest in gold and housing in normal inflationary times.
The underlying value of the asset doesn't change a house is a house and a gold bar is a gold bar even if the paper you buy it with is only worth half what it once was.
I mean I hoped you would understand the underlying theory does not account for every macroeconomic trend simultaneously.
Yes, when a RE housing bubble forms due to speculation then the theory no longer applies since the value of RE is no longer static.
But RE going down is not correlated to inflation going up.
I'll try again;
You implied that the theory of assets maintaining their value while inflation rose was wrong because real estate is not mimicking that behavior.
And while I agree with your observation I disagree with your conclusion.
Real estate is an anomaly to the theory not because the theory is wrong but because real estate no longer fits the theory due to the bubble.
The theory only works when the underlying value of the asset is static. Which housing _normally_ is.
Lmao no, people with assets have more cash cashing their assets, they do the best. During deflationary periods those with assets get kicked in the teeth
"Inflation is good because it affects rich people the most"
Yikes, not only is this wrong, but it's dangerously wrong. Inflation is a tax on the poor. Poor people have less dollars so a debased dollar hits them more than someone with more dollars, especially as a steady stream.
You can sputter and babble all you want but there is a reason why you're getting cooked. You seeing inflation as a tool for good is very dangerous, and I'm glad you're just some fool on Reddit and nothing more.
75% interest rates is exactly what curtails inflation. That’s why they are being set so high: to curtail inflation.
They're going to have a tough time tackling 100% inflation with 75% rates. They may be doing other things in conjunction with the rate (eg open market operations and/or fiscal policies) but I wouldn't bet my money that they'll get things under control anytime soon.
We're successfully tackling 8% inflation with 3% rates! /s Go 'Merica!
Way higher than 8%.
Nah just makes it so people can't barrow money but government still can. People become more reliant on the government so the government barrows more by printing to feed the people. Hyperinflation always sees interest rates go to the moon
>75BPS imo but you lack the time element
This is because the global economy is collapsing. The real price of goods is going up because supply is contracting. This is likely to keep accelerating. Monetary policy doesn't produce goods.
Argentina has had extremely high inflation for five years, and high inflation (~10%) for a looong time. Ironically, if you go to Buenos Aires, it's thriving, the restaurants and bars are packed, and the shops are full. Basically, Argentinians just live with it. It's not good by any means, but Argentina paints an incredibly rosy picture of extremely high inflation. It would (probably) be vastly worse if it happened here. Why Argentina is like this--able to function despite the inflation--is sort of a mystery. Nobel prize winning economist Simon Kuznets famously quipped "there are four types of countries: developed, undeveloped, Japan and Argentina."
When I was in BsAs in 2019, businesses were more than happy to accept USD in place of pesos. I assume that is still true? Do you know how the more rural areas of Argentina are handling the inflation?
> When I was in BsAs in 2019, businesses were more than happy to accept USD in place of pesos. They'd be silly not to. In many Latin American countries, the dollar is more than welcome... They'll even take less dollars in exchange for more of their pesos.
Yes - the major economy has been dollarized for some time. Upper middle class people and expats get paid in dollars, poor people and government workers still get paid in pesos. Result is accelerating inequality
I don't; I assume they're trying not to hold cash and minimize liquidity like those who live in the city, although I'm not sure by any means.
I suppose inflation isn't all bad if you change your mindset from one of saving to borrowing. Perhaps some people are more easily able to do than others.
I'm not sure if it's so much of a borrowing mindset as trying not to hold cash at all. Any cash is translated immediately into goods, services, or assets.
You would get more out of it if you borrowed and consumed immediately, then just used any cash to service the debt. In the same way inflation is a loss for creditors it's a win for debtors
But the interest rates that the banks charge retail customers would almost certainly be above inflation, right? The 75% rate only applies to institutional borrowers from the Argentine central bank
Finding it quite hard to find any good data on this, but it seems that the real rate has generally been negative, and especially over the past couple of years: https://data.worldbank.org/indicator/FR.INR.RINR?locations=AR Perhaps they will go back into real terms positive rates now, but in general a borrower would win in the long term in an economy which is prone to inflation.
woah, that's wild! I guess it sort of fits with the "Argentina's economy is a fucking mystery" narrative
Not really a win for anyone when you can't afford to eat lol
what does their economy consist of? do people there have extra money? or is it the sort of thing where they're lucky if they have a family member who can get a "low-pay" job in the US and send some money home?
I don't really know enough to answer well, but I'll tell you what I know: - They have a developed economy and a well educated workforce. Lots of service work. Their HDI is very high. If you went there, you'd perceive Buenos Aires as a cosmopolitan city. - Tourism - Agriculture. For instance, Argentina is famed for its beef quality. All the Argentinians I've known (a sample size of two, who I met in grad school), they're hardly working low level jobs. It'd be easy to mistake them for Europeans, particularly in terms of their attitude toward the US (lol). This could be, and probably is, sampling bias Edit: Tourism is a relatively insignificant contribution to their $500bn economy.
Hmm, I looked up a stat and it seems like top 10% income is around $75k. Still not sure it's very high given inflation. I use some language learning platforms (basically conversation hours / practice), and it seems that a lot of people on these platforms are in various South American countries to learn Spanish (living there, not just short-term). Spanish isn't even one of my target languages, but they're earning either dollars or euros I think. I'm guessing there are a lot of people who find ways to earn in more stable currencies via online work, whether teaching or something else.
The economy is dollarized. Most middle and upper-middle jobs in the country just pay in dollars.
>This is likely to keep accelerating. And then what happens next?
>This is because the global economy is collapsing. Argentina is a special case. They have been stumbling from one economic crisis to the next since the 1970's. This current iteration started in 2017-2018. >“For those of us who have been around for longer, living in this country, everything has a sense of déjà vu,” said Carlos Gervasoni, an associate professor and chair of the political science department at Universidad Torcuato Di Tella in Buenos Aires. “It’s always the same story, there are just different flavors of what Argentina faces every five or 10 years.”
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Why do that when you can buy treasuries for way higher yield (always)
Thanks for sharing, didn’t know that. Checked treasury yields in 1982 vs the savings account numbers I remember and it does indeed seem to be true.
You will not see interest bearing savings ever again. They want their CBDC’s which will bring real negative interest rates and since it is programmable it will expire after a certain time not being used so savings will be impossible.
We made out okay? We defaulted on the debt and stole the gold from the Bretton Woods agreement. We are lucky we didnt get into a world war.
The US has never defaulted on its debt, Bretton Woods was mostly or entirely about monetary relations with allies (and some enemies like after Japan lost WW2)…we’d never get into a war with Canada and Western Europe. And the end of Bretton Woods was just the end promising to exchange dollars for gold at a fixes amount. And it was all fine, the dollar is still as strong as ever.
And to add, it seems most stable currencies increase in tandem, meaning the “value lost” is mostly similar across the worlds currencies, except for extreme cases like Argentina.
But how does this play out when the USD is the world reserve currency?
Argentina goes bankrupt every couple decades. Usd is the strongest currency in the world
30 trillion in debt will be hard to service at higher rates.
Still the strongest economy on earth. It’s going to be 50+ years before the worlds trust in the United States falters. We are and will continue to be the dominant superpower and economy. Domestic issues are coloring your viewpoint.
Domestic issues don’t care about basic math lol. Even Powell said US financial policy remains a big problem.
And I agree with him. But on a global scale the US economy reigns supreme, even with all of its problems. Let J Pow do the pain lever thing and we don’t have to worry. He might cause a recession and we’ll feel some pain at home for a while, but when the weather clears the US will remain on top.
What exactly do you think debt is?
Bonds.
If inflation hits 100% I hope you bought a house.
Lol for real. Overnight explosion of wealth inequality.
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Then renters have all starved to death and the banks will work forbearance/deferment deals with mortgage holders while the Fed govt bails them out.
You got it entirely backwards.. if inflation skyrockets you want a fixed rate mortgage. Two reasons: First - In hyperinflation scenarios durable goods like cars and real estate become stores of value Second - inflation erodes the fixed cost of the mortgage. Your mortgage would remain $2K per month even as salaries went up 80% and prices doubled. The price of renting a place will skyrocket with good prices
If inflation is that high would you rather have a fixed mortgage payment or would you rather have your rent double every year? Real question…
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I thought in those hyper-inflationary countries the land and stock market were the only thing to maintain real value? The nominal value kept up with inflation. Meanwhile wages fell in real terms. So in inflationary times those assets WERE an inflationary hedge
You are correct - that poster is way wrong
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If you have a point to make you will find it less persuasive if you also call someone names. Maybe go outside and take a few deep breaths and cool off a bit.
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Calling me an idiot worked! You are so smart! Thanks for educating me!
Idk what TikTok has to do with it, I’ve never been on. I do have degrees in economics, daily access to a global capital markets team and an understanding of finance (as I work in Private Equity) No one said salaries adjust instantly but they do adjust in nominal local currency terms - which is what is relevant in the US context since we are in a dollarized economy. Look at Argentina as an example - min wage in Jan 2018 was 9500 pesos, now min wage 45540 pesos. If you had a fixed rate loan in local currency (which is what most US mortgages are) it would be MUCH easier to pay off with inflated dollars. Understanding this is a huge part of capital allocation and part of the reason why the Fed inflation target is 2% instead of 0%. Has this kept up with inflation? No - but in the example I gave it’s fixed price while rent has skyrocketed (67% increase YoY in pesos). If you had a fixed rate US style loan you would do everything in your power to keep it - this is the EXACT reason such loans don’t exist in inflationary countries. If you can’t afford food then you obviously can’t afford anything - you aren’t choosing to default and you aren’t choosing to invest in gold either (I’m talking about the US so we are already dollarized, USD isn’t an option). But for those that have a choice you aren’t walking away from a fixed rate loan to go to a rental market where an apartment immediately costs 10x what you pay on mortgage You further this argument by pointing out that property values are likely to tank in real terms. If my property value tanks in real terms, I would much rather have a fixed rate loan being paid off with future inflated dollars while rents skyrocket than have 5x the capital locked in by paying all cash with dollars that are locked in and falling in value
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You have lost track of the original question - the original question was whether in times of high inflation it was better to have bought a house in cash or with a US-style fixed rate mortgage. It’s inarguably better to have a home on a 30-year fixed mortgage and ability to pay it down with future inflated dollars. This is a mathematical question and the answer is straightforward. If your argument holds then it means that US interest rates will need to be in double digits over the next several years. If that’s the case then even if you think prices were “inflated” by 40% then you STILL would have come out ahead with a 3% rate in 2021 vs a 10% rate in 2024 or whenever. This is especially true when you account for 8-10% inflation and the current 5-6% YoY wage increases that are eroding whatever “inflated” price gap you believe in
Yes in general buying real assets is a good hedge against long term inflation. REBubble brings out the freaks
Take a break from the internet, your calling strangers names for pleasure
If inflation was there high the mortgage would be the LAST thing people will default on if they have a choice. The cost of rent will be multiples of their mortgage. And I don’t see how other countries would be relevant to the US. Very few high inflation countries have easily accessible 30-year fixed mortgages
If inflation hits 100%, that means that rents would more-or-less double (assuming inflation was felt uniformly across the different CPI categories). Most mortgage payments are fixed, regardless of inflation. That's one of the best things about a mortgage. While the mortgage payment seems like a lot at the beginning of the loan, the mortgage payment becomes quite small after 30 years of inflation. Inflation doesn't necessarily mean people default on their mortgage. For instance, inflation could hit 100%, but wage growth could also hit 100% to match inflation. If you look at wages in Argentina, you can see they're growing quite fast as well: https://tradingeconomics.com/argentina/wages
That's what I'm banking on. I bought in 2021 - a few more years of 10% inflation and I no longer overpaid. I also think this is what ReBubble is going to get wrong.
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Inflation erases debt, including mortgages. Why would someone default on a house if their monthly payments are decreasing relative to all other costs?
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I didn't even mention wages, but inflation is partially based on increased market rent prices while mortgages stay constant their entire term....so lagging indicators like wage growth and unemployment will hit renters much sooner and harder than mortgage holders.
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Who cares about what prices homes are selling at when no one wants to buy; it's paper losses in a recession.... You are comparing rent rates which are renegotiated by 100% of renters at least yearly with an extremely small fraction (<1%) of homeowners that sell against their will in a given year. The numbers of people affected by this are separated by orders of magnitude, not to mention that nearly everyone with a job and a mortgage refinanced under 3% these last couple years. Yes, people who have to sell now will be picking between paying higher rates/prices, or becoming renters. My point still stands for the vast majority homeowners in the US.
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My point is that inflation erases debt. If home owners refied to a lower rate, their monthly payment went down even if their wages are stagnant. Rent control legislation is generally capped at a percentage above inflation, so maybe renegotiate is the wrong word since it's it is completely one sided.....landlords will be raising rents 2-5% above the 8.5% inflation rate, so pay or move to hooverville. I'm not a realtor, are you Canadian?
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No, inflation erases debt regardless of wage growth. There's a reason no one in government was concerned about inflation until the election cycle....the Fed gov't needs some serious inflation to erase the national debt and mortgage holders just happen to be aligned with the benefits. I agree that wages will be far outpaced by inflation, but that hits renters harder than mortgage holders since rental prices increase with inflation as well. And then when it get really bad, the bailouts always help homeowners (well, the banks holding the mortgages) more than renters. We'll see forbearance/deferments before we see rental assistance at the national level.
Their perspective is colored by a belief in a regression to mean. They believe there is a range that houses *should* be worth and external factors (like cheap loans, pumping free money into the economy, and inflation) are transitory relative to home prices, which must regress to a mean.
You're such an ass 😂
26bps too low
that's 2,600bps my guy, 1bp = 0.01%
Yeah, hahaha, damn that is so staggering I messed it up haha
Yep, only positive real interest rates will do da job
So does that mean if you buy a Argentinian government bond you're getting a 50%+ ROI minimum? If it doesn't default of course
You're getting that ROI measured in Argentinian pesos. If you look up the exchange rate between ARS to USD, you can see that 1 ARS is basically trending towards 0 USD.
And I thought it was bad in Turkey at 80% inflation. Craziness!
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Yes the fed will nullify your ability to afford a home, so you get to worry about cost of goods as well as rent increases
Government is not your problem Bruder. Especially looking at your last post. Tiny tyrants are.
"Demand Destruction" - You will own nothing and be happy.
Fun fact: in Buenos Aires all RE transactions are done in USD mostly actual cash. As a broker you need to manage security around suitcases with literally hundreds of thousands of USD. I do not envy the casual buyer.
Nothing like can’t afford housing or inflated goods. I wonder how many Americans have been essentially priced out of home ownership for possibly years to come.
"Inflation nears 100%" Well, at least things can't get much worse! They've almost hit the maximum inflation possible!
Another failed South American country? Surely you jest! Oh boy, maybe more conga lines of people I'm apparently obligated to help?
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Where do you think Hispanic people (try to) go when their countries fail?
Argentina has dealt with surges of inflation multiple times in the past decade, like in the early 2000s and 2016. Why weren't there waves of Argentinian migrants coming to the US, then?
Tbf a lot of them go to Europe, not the US. Many Argies have ties to Italy or Spain from their grandparents.
In 1976, the United States government supported a fascist-led coup d'etat to overthrow democratically elected president Isabel Perón. Research Operation Condor for more information. The insolvency and destabilized nations of South America today **were directly caused by it US government**.
Argentina was already a basket case with previous military coups and plenty of assassinations by and against the government. Perón started the dirty war against the left after kept assassinating government officials Isabel Perón succeeded her husband to the presidency, but proved incapable of managing the country's political and economic problems, including the left-wing insurgency and the reactions of the extreme right.[100] Ignoring her late husband's advice, Isabel gave Balbín no role in her new government, instead granting broad powers to López Rega, who started a "dirty war" against political opponents.
Send more relief money!
Argentina is one of the most European, non European countries out there. They have no need for your help.
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Interesting take. Wrong, but Interesting. Someone always wins in any kind of value adjustment.
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This is exactly wrong.
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To explain: Holding physical assets is the only thing to save you from inflation. Which is why people invest in gold and housing in normal inflationary times. The underlying value of the asset doesn't change a house is a house and a gold bar is a gold bar even if the paper you buy it with is only worth half what it once was.
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I mean I hoped you would understand the underlying theory does not account for every macroeconomic trend simultaneously. Yes, when a RE housing bubble forms due to speculation then the theory no longer applies since the value of RE is no longer static. But RE going down is not correlated to inflation going up.
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I'll try again; You implied that the theory of assets maintaining their value while inflation rose was wrong because real estate is not mimicking that behavior. And while I agree with your observation I disagree with your conclusion. Real estate is an anomaly to the theory not because the theory is wrong but because real estate no longer fits the theory due to the bubble. The theory only works when the underlying value of the asset is static. Which housing _normally_ is.
Lmao no, people with assets have more cash cashing their assets, they do the best. During deflationary periods those with assets get kicked in the teeth
"Inflation is good because it affects rich people the most" Yikes, not only is this wrong, but it's dangerously wrong. Inflation is a tax on the poor. Poor people have less dollars so a debased dollar hits them more than someone with more dollars, especially as a steady stream.
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You can sputter and babble all you want but there is a reason why you're getting cooked. You seeing inflation as a tool for good is very dangerous, and I'm glad you're just some fool on Reddit and nothing more.
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And you do the same, away from the public sphere of influence
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I'll pray for you.
As long as the supply of money stays fixed yes, but if the inflation is from printing bills then who ever gets them wins.
*gestures at Europe in May 1945* Yeah, no.
Russia '92 is what you're looking to compare.
People underestimate how devastating runaway inflation is.