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Old 12-14-2011, 05:54 PM  
MrMaxwell
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Join Date: Jul 2005
Posts: 10,057
Quote:
Originally Posted by jalami View Post
In a high inflation / hyperinflation scenario, debts with adjustable interest rates will have rate increases that will reliably outpace inflation. You're right about fixed rate debts, although it could be much more tricky to earn the income necessary to pay them off. Savings would be wiped out, and if they are in a foreign currency, they might crash faster or slower than the USD (I assume we're talking about a hypothetical USD crash, and by extension, a hypothetical global currency collapse).

Needless to say in such a scenario it might be prohibitive or even impossible to take on any new debt. Or have access to any of the savings you might have at home or in foreign countries.

My advice -- don't worry about it, and just be prudent in being prepared for such a scenario based on your best personal assessment on its likelihood and severity. I don't see anything crazy about investing a small portion of your portfolio in physical gold/silver, learning how to grow food locally (which can be fulfilling on its own regardless of what happens), developing useful survival skills (which at any rate will serve you well in a natural disaster scenario anyway), and so on.

Now that makes some sense.. I can see how you're fucked either way on adjustable rate debt. When you hear about countries with huge huge sudden inflation, do the rates on private debts go up into the 1000s of %s??
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