What happens to my paycheck if hyperinflation occurs?

Discussion in 'Economics' started by TimeCorrosion, Dec 8, 2009.

  1. Hi all:

    With the Fed creating trillions of dollars out of thin air, and with so many warnings in the media and YouTube, I am genuinely concerned about hyperinflation because of the following additional factors:

    (1) I am paid by the government, and my paycheck is deposited electronically into my bank account. With the government running a huge deficit, if it takes more dollars to buy basic necessities, the government will not give me more money to cover these higher prices. Unlike people who open their own bakery and can charge customers higher prices in cash, I depend on the government for payment and credits and cannot charge a penny more. Even if the government increases payment, my taxes will go up because I have no cash to hide.

    (2) If hyperinflation does occur, how can I use it to "inflate away" my house mortgages? If my paycheck does not increase and I cannot get cash, hyperinflation can only hurt.

    Thanks for any suggestions.
  2. your assumption is correct you will become poorer.
  3. indexer


    Cost of living raise. Its not a big deal, I went through it in the late 1970's. The main people who get hurt are those who own bonds.
  4. IMO:

    We are nowhere near hyperinflation, not even much inflation. This is just wrong thinking IMO.

    We have Subway bragging about $5 footlongs, McDonalds bragging about $1 burgers, KFC for Gods sake advertising pricing! Fairly cheap rents because of real estate, reasonable car deals, lower and lower electronics prices, etc. I could go on and on. We have stores everywhere trying to compete on price, we have $20 tickets to NHL hockey games, we have fairly stable gas prices (for now at least).

    If you own a home or anything else that you make a fixed monthly payment on, inflation would actually be good if your pay went up at the same rate as inflation. Probably it wouldn't, but it might go up all most as much, and that would be very, very good for homeowners who still owe alot on their homes.

    All this IMO, but I really serious doubt there will be anything remotely like "hyperinflation" for a long, long time.

  5. hyperinflation, No because the fed has tools to counter act inflation.

    Carter style inflation, big possiblity.

    If your not in Hard Assets for net worth, Oil, Gold, Silver, even copper, or Land and depending on RE or have a basket of currencies to hedge your net worth and hold very little US dollars......your worth 74. on every dollar you made years ago.

    So, your all ready making less and your net worth is less in "Real Dollars".

    Gold and Oil are pricing in inflation. Even as Gold and Oil have a healthy pullback.....the red flag is there.

    It will take a few years for the country to feel the inflation, but you can position yourself now...before the SHeepole run to the hills.
  6. Just start buying a couple of ounces of silver now with every paycheck. Then when hyperinflation happens, you can sell one of those coins for 10,000$ each and pay off your mortgage very easily.

    My biggest worry is that the government is going to step in and change the money and force everyone who has a mortgage to revalue it in the new dollars so they cant pay off their mortgage with hyperinflation.
  7. I wouldn't worry about that. The government is here to help us. They wouldn't do anything like that.
  8. harkm



  9. You will need 4 things
    1) an automatic weapon
    2) plenty of ammo
    3) a dry place to sleep where no one can find you
    4) the balls to use 1-3 to their fullest potential
  10. if hyperinflation happens, the last thing you'd want to do would be to use hard assets to repay your mortgage (assuming it's a normal fixed-rate one)...

    Being a nominal (fixed-rate) borrower during periods of high inflation is great, since inflation eats away at your liabilities. So property mtged to the hilt might be, ironically, the best way for you to go, if you do really expect high inflation.
    #10     Dec 9, 2009