super inflation does what to dollar???

super inflation does what to dollar???

Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes

My wife asked me a question today and like most of her questions, I didn't have an answer! As someone who owns condos in Mexico that were actually under construction when the gigantic devaluation came to that country and saw the results, I'm wondering what might happen here. Please don't give me the bull crap replies on gloom and doom. That is not the reason for this question.

In Mexico, when the devaluation came they simply lopped off to zeros from their money and created a new money known as the peso Nuevo or new peso. The old money basically became worth nearly 0 overnight. Would this ever be a possibility here? I have always kept a good supply of actual dollars to be able to make payments on those items that have fixed monthly payments. This question made me wonder if there could come a time when those dollars would not be usable at the same value they show before a possible devaluation or super inflation.

As I mentioned to my wife, I don't have an answer to that. I do know when this occurred in Mexico if I wanted to see my condo get completed, I had to deposit additional funds above and beyond what my original contract called for. Additional thoughts, ideas, and suggestions are appreciated

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  • Mark UpdegraffBusiness Member
    Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 689 votes
    14y

    SInce US currency is not tied to a standard it will continue to inflate. I don't think the fed could get away with a "new" currency. Our current one will continue to be devalued until we can get some decent people in office that can restore our monetary system to the gold standard.

    Let's continue on your example.
    You thought you could complete a project for X peso
    You are then told it will cost you and additional Y newpesos to complete the project.
    The market value sets everything, so the question should be "After the additional investment, how does your asset compete in the new marketplace?"

  • Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
    14y

    Mark – as I recall, the actual value remained the same but the condo did cost me more money. I don't really put anything past our leaders(either side of the aisle) if and when times get Grecian. Rich

    PS – following up on the gold standard, would that require a confiscation of gold from those who have it? It is getting very difficult to try and foresee the future and plan for it in my opinion.

  • Birmingham, AL · Member since 2009 · 60 posts · 7 votes
    14y

    Gold was never actually confiscated. Back in 1933 you had to sell your gold to the government for 20 bucks and change per ounce. They didn't pry open private safety deposit boxes or search homes or anything like that. In theory that money you received from the government would be worth what you had in gold anyway, so someone who had 2 ounces of gold before "Executive Order 6102" was executed, would have twice the gold-pegged dollars someone who had 1 ounce would get for his gold.

    In practice it made the government able to manually adjust the value of the dollar, at their whim.

    About hyperinflation in the dollar, that would mean the collapse of the entire western monetary system, and make China extremely pissed.

    Hyperinflation also has an interesting effect on people, as seen here: http://en.wikipedia.org/wiki/Zero_stroke

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