Jason Hartman

Guess what that's all denominated in? Dollars. So if the value of the dollar goes down, the value of those things goes down. So your stocks are worth less, your bonds are worth less, your equity in your real estate's worth less, your savings account is worth less. But young people tend to have debt. And even if it's bad debt, it still is getting debased all the time through inflation.

Guess what that's all denominated in? Dollars. So if the value of the dollar goes down, the value of those things goes down. So your stocks are worth less, your bonds are worth less, your equity in your real estate's worth less, your savings account is worth less. But young people tend to have debt. And even if it's bad debt, it still is getting debased all the time through inflation.

So the parents don't have to die to transfer wealth in an inheritance to their children. It's just happening all the time. Because of inflation. So this happens between borrowers and lenders and between old people and young people. And it's just an incredible, incredible thing. So let's finish the story. We talked about what happened 12 years later in our example. We went from 1972 to 1984.

So the parents don't have to die to transfer wealth in an inheritance to their children. It's just happening all the time. Because of inflation. So this happens between borrowers and lenders and between old people and young people. And it's just an incredible, incredible thing. So let's finish the story. We talked about what happened 12 years later in our example. We went from 1972 to 1984.

Dollars only worth 40 cents. The $101 a month mortgage payment is now only 40 bucks. Great. What happened by the end of that? 30 years after 1972, when the person made the last payment on that mortgage, that payment was now, the dollar was worth 24 cents.

Dollars only worth 40 cents. The $101 a month mortgage payment is now only 40 bucks. Great. What happened by the end of that? 30 years after 1972, when the person made the last payment on that mortgage, that payment was now, the dollar was worth 24 cents.

Yeah. Well, maybe not ouch if you have debt.

Yeah. Well, maybe not ouch if you have debt.

Yeah. Ouch to the lender. Yeah. Yeah. Not to the borrower.

Yeah. Ouch to the lender. Yeah. Yeah. Not to the borrower.

And so now that $101 a month mortgage is only $24. Yeah. So what happened there? Like, if we really do the math on this, here's what happened. They got their loan, their mortgage, it's 7.3%, okay? They thought they were paying 7.3% and probably had several conversations over the years. Can you hear it now?

And so now that $101 a month mortgage is only $24. Yeah. So what happened there? Like, if we really do the math on this, here's what happened. They got their loan, their mortgage, it's 7.3%, okay? They thought they were paying 7.3% and probably had several conversations over the years. Can you hear it now?

The husband and the wife are saying, well, you know, hey, honey, do you think we should pay off this mortgage? Because we're paying 7.3%. Like, why should we be paying all this interest to the bank? The bank is getting rich. No, you're getting rich because the inflation is making your debt cheaper. So hopefully they didn't pay the mortgage off, OK?

The husband and the wife are saying, well, you know, hey, honey, do you think we should pay off this mortgage? Because we're paying 7.3%. Like, why should we be paying all this interest to the bank? The bank is getting rich. No, you're getting rich because the inflation is making your debt cheaper. So hopefully they didn't pay the mortgage off, OK?

But then, if you analyze it, after inflation debased the value of the loan balance and the monthly payment on the loan, both of them, right? They really were only paying 1.06%.

But then, if you analyze it, after inflation debased the value of the loan balance and the monthly payment on the loan, both of them, right? They really were only paying 1.06%.

Yes.

Yes.

That's all they paid in interest, yes. That was their true interest rate.

That's all they paid in interest, yes. That was their true interest rate.