Ill take an ELI5 approach and say that for example, there are two people. One is $500k in debt. The other one has $500k in the bank. Hyperinflation happens and $500k is now worth the equivalent of $50. Who made it out better, the guy $500k in debt or the guy with $500k in the bank? The guy in debt now has (adjusted for inflation) $50M worth in assets he only paid $50 for after inflation. The guy who had $500k in the bank probably spent a long time saving that up and it is now worthless.
Debt isn't necessarily good but I feel if you are a "prepper" you should always hold a solid amount of low interest debt to protect yourself against hyperinflation.
The debt needs to be backed by an asset like precious metals or real estate. .. if inflation outpaces the debt, the value of the asset in dollars goes up but the debt stays the same. His example is a bit extreme. So let's say you bought a $100k house and took out a loan for $100k. Even if the dollar loses half of its value, your house will be worth $200k but still only have the $100k debt.
Can you explain please?
Ill take an ELI5 approach and say that for example, there are two people. One is $500k in debt. The other one has $500k in the bank. Hyperinflation happens and $500k is now worth the equivalent of $50. Who made it out better, the guy $500k in debt or the guy with $500k in the bank? The guy in debt now has (adjusted for inflation) $50M worth in assets he only paid $50 for after inflation. The guy who had $500k in the bank probably spent a long time saving that up and it is now worthless.
Debt isn't necessarily good but I feel if you are a "prepper" you should always hold a solid amount of low interest debt to protect yourself against hyperinflation.
Thanks for answering. How would the guy with debt have 50M worth of assets? I'm trying to understand.
The debt needs to be backed by an asset like precious metals or real estate. .. if inflation outpaces the debt, the value of the asset in dollars goes up but the debt stays the same. His example is a bit extreme. So let's say you bought a $100k house and took out a loan for $100k. Even if the dollar loses half of its value, your house will be worth $200k but still only have the $100k debt.