Re: Re: Catch 22

#114737

Chopera
Participant

@garysfbcn wrote:

Weak currencies creates inflation and in these evil times that’s no bad thing if it’s controlled. Asset values rise and debt reduces.

But…interest on variable mortgages also rise, creating a problem for those who have them, and suppressing property prices by people seeking mortgages (fewer people qualifying for higher payments, reducing the pool of those who can purchase properties at a specific pricepoint).

True, but the idea is that with inflation more money moves around the economy, people’s wages increase, as well as interest rates on savings, so the increase in interest payments is manageable, and offset by the devaluation of their debt. I remember inflation in the UK being around 8% and, while not ideal, it was manageable. For countries with their own currency it’s an option, for Spain it isn’t.