QUESTION: Dear Sir/Madam
Thank you so much for what you all do.
I was just reading today’s Blog 17-08-2018 – ‘ Real Estate – Leverage – Transition to the Reset ‘. The bit I did not understand was where it was written ‘ Keep in mind that as the currency declines, then the repayment cost of a mortgage declines. One the one hand, mortgages will be unavailable but those who hold the mortgage lose the most ‘
My question is when the Reset happens in which way will the mortgage holders lose the most even if the repayment cost of a mortgage declines ? I live in the UK
thank you so much
ANSWER: Since I posted that chart from Socrates that illustrates real estate, many people have written in to ask where can they find that on Socrates. This is part of the pro version that will be released WE HOPE for the WEC this year (see Socrates Newsletter just sent out). Here are the real estate markets covered by Socrates at this time.
What I mean when I say that those who hold mortgages lose in such a situation of a decline in the purchasing power of a currency is basic. The city of Detroit suspended its payments on bonds in 1937. They resumed in 1963. Now they say they never defaulted. However, they paid back with cheaper dollars. The holder of a mortgage or a bond charges interest which is supposed to be more than the inflation rate. When inflation exceeds the interest rate, then you are paying back with cheaper dollars.
Take a life-insurance policy. If you bought one in the 1940s and it was for the huge amount of $5,000, after funeral costs of say $1,500, you left your heirs a sizable chunk of money.
…click on the above link to read the rest of the article…
