How does higher inflation make paying off loans easier?

[bingbongbangbung]

My friend told me that was the case, and why he willingly borrowed money despite earning so much from stocks (before the recession). I don't know how that's possible, other than the loan amount itself not succumbing to inflation and minimum wage increasing. But when I told him that, he told me I don't get it and that's not why paying back loans is easier during high inflation. So please explain to me why it is if you're very knowledgeable in economics.

[Anonymous]

Largely depends on the details of the loan. For instance my parents lost their first home in the 80s because intrest rates went up.

Its really the intrest on the loans that's often the killer anyhow. Most people are spending a 3rd of their earnings servicing the intrest on the loans they have. Its why a lot Americans don't have any money.

Your friend likely has his head screwed on right. Much like my husband who bought property when house prices crashed and rented them. My husband and I work it the other way, we don't have loans or use credit cards.

[bingbongbangbung]

No because he heavily suffers from lifestyle inflation 😂

[Astarlessnightsky]

Extreme example:
You have a loan of 1million, but with inflation a loaf of bread now costs 2000 billion, so its easier paying your loan shark than buying bread.

Obviously thats not the case right now, but it hopefully shows what i am trying to say.

The amount of debt stays the same, but as money loses its value its easier to pay of fixed amounts, unlike goods like bread/butter/... which are increasingly getting more expensive.

[dynamicyandere]

2000 billion dollar loaf of bread 🍞

💀💀💀

[Astarlessnightsky]

That happend in germany at the end of WWII and recently in Venuzuela.

Ofcourse thats really extreme.

[bingbongbangbung]

But that's ignoring interest rates and assuming wages increase with inflation though

[Guardian45]

It. Doesn't.! It's Economics, Inflation, Supply & Demand.

[bingbongbangbung]

How?

[Guardian45]

Thank you for MHG!