- cross-posted to:
- politicalmemes@lemmy.world
- cross-posted to:
- politicalmemes@lemmy.world
cross-posted from: https://lemmy.world/post/13611200
You’ve got to do more than just forego that expensive avocado toast!
cross-posted from: https://lemmy.world/post/13611200
You’ve got to do more than just forego that expensive avocado toast!
Actually, now would be the perfect time to hold on to your car, since the Federal Reserve is going to drop interest rates soon and therefore increase inflation. And then just before they increase rates again, you can sell your car and then buy another one. When they cars get cheaper again. You can use our broken system to your advantage, but it does take work. As an example, I purchased a home in early 2022 and have only been living here for two years and already have $30,000 worth of equity in this house due to inflation. You are basically shorting the USD by buying a house because a FIXED rate mortgage cant change and cause your payment to go nuts.
Those calculating the fixed rate are accounting for increased inflation. Trying to beat them at their own game is highly dependant on luck.
Fair enough, but I suspect that inflation is going to go well beyond their control, and they won’t think to have calculated for that much. Taking my house, for example, the interest rate on it is a little over 4%, which means that if inflation is above 4%, that they lose money. According to the government provided numbers, inflation is below 4%. However, the real numbers are quite a bit higher.
You could very well be right. However, this depends on other factors too, such as assuming you have opportunity to grow your wages in correspondence with inflation, which might not be true for a lot of people. In Norway we have the term “reallønn” (real wages) that is basically wage in relation to inflation, which one can see almost always decreases in times of high inflation (on average). So for those that have leverage to get raises beating inflation, high inflation could entail a good time to take up loans. Still, central banks also almost always respond with increasing rents subsequently, hence the answer might be maybe not so much given that paydown times often are 30 years or so.