Weimar Hyperinflation - was a HOUSING a big winner?

[pyewackitt]

I believe Jim Rogers has been advocating buying arable land and farms as a good investment in the current climate. Even if prices are steeper than a few years for some such plots i think the food % spending in an inflationary environment shows that to be good advise... except that the EU regulations may make being an actual farmer in the UK at least a lot harder than it might have been previously and as a consequence maybe its worth looking at foodstuff commodities also i.e. soybeans, oil, etc.

[aliveandkicking]

(From HPC's "Inflation Question"):

 

 

 

That's exactly right.

You need higher income, or the debt burden is unchanged for the borrower.

It only "erodes" in relation to rising income.

 

All i know is i read your data and a poor family begininning paying 10 for food ended up paying 9 trillion on food.

 

Evidently the income rose.

 

However there are complications. In New zealand for example if i were debt free i would be paying 100 trillion on property rates on a small property and that could crush me if i was reduced to being a poor person able to get by on 20 living costs.

 

What about the interest rates being paid?

 

Weimar wanted hyperinflation i believe to give the finger to the oppressive reparation charges and could do so under the terms of the agreement - that being the case it is not the best example for many other countries..

[InternationalRockSuperstar]

Either the data is wrong or some other explanation of how people earning small earlier nominal numbers could afford later ginormous numbers.

 

the fact that they ended up spending 99.7% of their income on just food and clothing makes it pretty f****** obvious that their wages didn't keep up with inflation.

 

[aliveandkicking]

the fact that they ended up spending 99.7% of their income on just food and clothing makes it pretty f****** obvious that their wages didn't keep up with inflation.

 

Congratulations you are agreeing with me their income rose massively.

 

As you know i was answering:

 

That's exactly right.

You need higher income, or the debt burden is unchanged for the borrower.

It only "erodes" in relation to rising income.

[electroweak]

I expect ths all has a lot to do with sitting tenants rights to pre-agreed rent increases over many MANY years, so the nflation screwed the Landlords who had agreed long-term tenancies at what would become silly low rental prices.

 

Of course German houses kept their value; I mean they are worth quite a bit now, aren't they?

[InternationalRockSuperstar]

Congratulations you are agreeing with me their income rose massively.

 

I assume you mean in nominal terms.

 

in real terms german wages sank to almost third world levels.

 

That's exactly right.

You need higher income, or the debt burden is unchanged for the borrower.

It only "erodes" in relation to rising income.

 

so long as the interest rate on the debt is less than the nominal wage increases.

[aliveandkicking]

I expect ths all has a lot to do with sitting tenants rights to pre-agreed rent increases over many MANY years, so the nflation screwed the Landlords who had agreed long-term tenancies at what would become silly low rental prices.

 

Of course German houses kept their value; I mean they are worth quite a bit now, aren't they?

 

We need income data for the various years to make sense of this.

 

Interest rates rose in 1922 from 5% beginning 1921 and since 1914 to 19% january 30% april 90% september. Some people evidently did very well in this period others were crushed and or committed suicide. Evidently incomes must have been rapidly rising for many others. So far this board does not have all the information necessary to figure it out. It appears some of the financially savvy did very well out of this situation which was then later an excuse for aspects of Hitlers policy.

 

If it comes down to renting your house and having gold or just having your own debt free house which one wins? As i mentioned earlier NZ is not such a good place to be in hyperinflation because of property taxes if you lost your job. Finland has low property taxes and high income taxes.

[DoctorSolar]

It appears some of the financially savvy did very well out of this situation which was then later an excuse for aspects of Hitlers policy.

Can you provide a link to the evidence of people doing very well out of the hyperinflation?

I would be particularly interested in evidence of landlords who did well.

 

[aliveandkicking]

Can you provide a link to the evidence of people doing very well out of the hyperinflation?

I would be particularly interested in evidence of landlords who did well.

 

http://www.nowandfutures.com/us_weimar.html

 

This link suggests some traders did well when people were obliged to sell valueables at fire sale prices when many things in germany were falling in price - presumably because food and basic living was the priority as pointed out by international rockstar where basic living costs were using up over 97% of income.

 

This link

 

http://www.mises.org/resources/4016

 

suggests a certain income earner did very badly. Pensioners and middle classes on some kind of fixed income or state income who did not have the ability or nouce to demand higher wages were forced to sell their capital goods to the 'capitalist classes' creating resentment of these people, whereas poorer people working in factories which were doing ok could strike and get higher wages.

 

The whole thing reads like a nightmare from what i can see!

[drbubb]

Can you provide a link to the evidence of people doing very well out of the hyperinflation?

I would be particularly interested in evidence of landlords who did well.

 

Enrieb published an excerpt.

 

Gold owners did brilliantly. Land owners did okay.

Apartment house owners did badly.

Read why here: Post#97:

http://www.housepricecrash.co.uk/forum/ind...90&start=90

[enrieb]

Can you provide a link to the evidence of people doing very well out of the hyperinflation?

I would be particularly interested in evidence of landlords who did well.

 

The only landlords that did well according to the anecdotes in Guttman's The Great Inflation were landlords who rented out property to foreigners in exchange for hard currency. People would come from all over to take advantage of the depreciating currency in that same way that we do today in places like Thailand. Its also one of the factors that leads to the hatred of foreigners that emerged later in Germany, and most other nations that suffer from hyperinflation.

[drbubb]

The only landlords that did well according to the anecdotes in Guttman's The Great Inflation were landlords who rented out property to foreigners in exchange for hard currency. People would come from all over to take advantage of the depreciating currency in that same way that we do today in places like Thailand. Its also one of the factors that leads to the hatred of foreigners that emerged later in Germany, and most other nations that suffer from hyperinflation.

 

Interesting.

Many expat foreigners live far better than locals, here in Hong Kong. But they are not hated.

They are an important part of the economic landscape - valued customers.

 

(I dont feel I am one of them completely, since I have no housing allowance to buy luxury accomodation.

Having said that, I am satisfied with the way I live, and think it is fine for me. The gf mostly agrees.)

 

[sid]

Enrieb published an excerpt.

 

Gold owners did brilliantly. Land owners did okay.

Apartment house owners did badly.

Read why here: Post#97:

http://www.housepricecrash.co.uk/forum/ind...90&start=90

 

 

It has been proven from history that owning PM has done well, though there is little evidence of the same about land ownership or properties etc. My main concern is the best way & best country to hold it. I am starting a new thread on this topic to see others opinion.

[drbubb]

"A stabilisation of house prices at current levels

would benefit homeowners, limiting the reduction in their net wealth and capping the scale of negative

equity, and would provide support to the balance sheet position of banks."

 

Now this kind of statement from the boe i find truly scary. I extrapolate from this that they will now try and put in place some scheme that achieves this stabilisation. Regardless of any consequences for sterling and savers.

 

Can this be achieved? And if so what would be the mechanism?

 

I don't see how just keeping interest rates low will be enough. Unemployment is rising and wages are falling. BT and BA are asking staff to work for free for goodness sakes!

 

I agree.

About the only effective mechanism is this:

They start buying a share in Houses, or they finance someone who does that (buys houses.)

Very dangerous, since it helps some (those who sell), while costing the taxpayer.

 

However, it does serve to prop up prices, while getting money into people's hands - a dangerous combination,

that really can lead to inflation, and maybe much higher inflation.

 

Other QE/Money printing techniques may help property somewhat, while leaving it near the bottom of the list

of those items that benefit from inflation. Look at the big lag in house prices in Weimar times !

[Catflap]

Watch from 2:55

 

 

[drbubb]

Do you think HYPERINFLATION is good for homeowners and property landlords?

/ Bump! /
To answer that, we need to consider:
What happened to Housing/Rents as a Percentage of Household spending
I heard the figure in a podcast (was it on Financial Sense?) and I could hardly believe it.
The actual figure may be a shocker for some here...

xx