patrick.net

FaithInHim says

I could break even in 5 years and 7 months. According to your chart, the rent went down to miserable $25 per month. I dont see how any real estate investor would allow the market rates to go down that low. You would almost be renting for free.

You won't give a rat's ass about breaking even on your investment because you will be desperately trying to feed yourself and your children. The hyperinflationary scenario you mention would change everything, and the only thing people would worry about would be SURVIVAL. Yeah, most people can safely assume that the horrid conditions would go away after a few years, but humans can't go without food for more than a couple of weeks. You have to really think about the gravity of the situation. Money is WORTHLESS. An apple may well cost $100. Your kids are going to be crying because they are hungry and uncomfortable. Tell me that you are still concerned about RE investments when you can't even feed your kids.

FaithInHim says

@tdeloco Please help me understand that chart

Hyperinflation is not "inflation-on-steroids" as have been mentioned. It is the death of a fiat currency, and it would not be normal times. This is rare, but it has happened enough times during the past century. Wikipedia has a long list of examples.

Two values:
Nominal - Price in terms of dollars or other currency
Real - Purchasing power (expressed as a percentage of one's expenditures for example)

During this event, everything goes up in nominal terms. House prices and rent fall in real value, but food will skyrocket as people go into survival mode. They might squat, live in tent cities, pack 3 families in a 3-bedroom home.

So, your example $100,000 house being rented out for $1500. Let's also say you're spending $400 a month for food. Your house price and rent may quadruple in nominal terms, but at the same time, your food might go up twenty fold. So it becomes $400,000 house rented out for $6,000 while your food costs $8,000. Just a rough example.

Example: people ended up paying a hundred billion Zimbabwe dollars for three eggs.

drtor says

Sure, rent went to almost nothing, but so would mortgage payments have done.

Then when a working currency was brought back those who had a house and mortgage would own a house free and clear.

You are correct. Hyperinflation obliterates debt, and people end up paying off their debts quickly. But first, you have to survive (and maybe even thrive) this event. Lots of people will go bust. Furthermore, I don't know how banks will react in this event. Are they going to charge you fees many times your monthly mortgage?

I have also been reading FOFOA's blog. This guy (or gal) is great and has a very broad understanding of currency. My thoughts were proven wrong, the printing presses simply reacts to the event, not the cause of it.

So, NOW is the time to buy? Or NOW? How about NOW? Damn, I missed it!

Interesting thread.

During the German hyperinflation, was there massive starvation?

During the Great Depression in the US, was there famine?

During the famines in the USSR (1930s), China (1960s), and North Korea (recent), was there general disorder down to roving bands fighting over food?

tdeloco says

If you believe hyperinflation is coming, you best stock up on Guns, Gold and a year's worth of MREs.

MREs are expensive. Better off going with cool dry storage of dried beans and rice.

Comparing the Zimbabwe currency to the Dollar is absolutely ludicrous.Is Zimbabwe one the worlds largest economies like the U.S. Your arguments are the typical fear mongering that have no basis on reality.

FaithInHim says

Phoenix housing market has finally bottomed

bottom = recovery... prices are bouncing around the normal range. Welcome to the NEW normal pricing.. which is the OLD normal pricing.

http://dqnews.com/Articles/2012/News/Phoenix/RRMAAZ120307.aspx

"The median price paid in January for all new and resale houses and condos sold in the Phoenix region was $127,500. That was down 1.2 percent from the month before but up 7.1 percent from a year earlier. January marked the second month in a row in which the overall median sale price rose year-over-year. (In December 2011 the Phoenix area’s median posted a 7.5 annual gain.)"

2k12 says

Comparing the Zimbabwe currency to the Dollar is absolutely ludicrous.Is Zimbabwe one the worlds largest economies like the U.S. Your arguments are the typical fear mongering that have no basis on reality.

Clearly you don't understand the fiat currencies. We're the biggest economy simply because the U.S. Dollar is king of all fiat currencies, but can change overnight.

Fear mongering? I only addressed the question "what happens in the event of...", and I answered using textbook examples. Studying them gives us perspective.

Things are clearly different in the U.S., and things may unfold differently. However, you cannot rule out economic collapse regardless of the size the the U.S. economy.