How does increasing inflation help people with mortgages. Is it as simple as

[applegrove]

the set price of their homes falls in relation to their wages and other assests?

[MFrohike]

1. Call me crazy

The debt is a specific dollar amount. Inflation reduces the value of the debt by making those dollars worth less.

[Warpy]

2. It certainly helped the people who bought in the 60s and paid it off in the 90s

even though inflation in wages never kept pace with inflation in goods and services. That's why women had to enter the workforce in such huge numbers.

While inflation might be good for the people who are still working and whose wages are keeping pace, it's pure hell on people trying to survive on annuities and pensions, which is why Nixon and Ford both screamed about a 4% inflation rate (but refused to do a damned thing to curb OPEC and their oil shocks). The effect was softened slightly by COLAs in Social Security payments, but even those were based on a falsely lower inflation rate.

[ChandlerJr]

3. The theory is that you are paying back yesterdays dollars with todays cheaper dollars

The dollar you borrowed yesterday is being paid back with a dollar that's only worth 90 cents today.

[whoneedstickets]

4. The biggest issue is escape...

Many folks are underwater on their mortgages where the amount owed is higher than the sale value of the property. These people are trapped in their houses unless they can arrange a short sale or are willing to walk away and allow forclosure.

This is especially problematic for home owners who were nearing retirement and who knew that they could probably not afford their mortgage in retirement but thought they would be able to take some equity and downsize. Now they are trapped paying a bill that they can't afford and which is eating their savings. Because they have savings, walking away is problematic.

A blast of inflation could raise the price of homes enough to get folks out from under water. Of course, inflation will erode their savings too.

[roamer65]

8. ..and increase costs of other things such as food and energy.

[DBoon]

5. It was a reason farmers in the late 19th century wanted free silver

to pay off their debts to the bankers with cheaper dollars, instead of gold-denominated dollars which actually became more expensive over time

[pnwmom]

6. Yes. It only helps if you have a fixed rate mortgage.

If you have one, and your income rises over a long period of time, then your mortgage payment will be a smaller and smaller fraction of your income.

[Silver Swan]

7. Back in the late 1960's and early 1970's

A long mortgage was seen as good because inflation would make it easier to pay off. It was assumed wages would go up, but payments stayed the same. (And the value of the house would go up also.)

Inflation was how the US paid for the Vietnam War.

[dkf]

9. Ask people what they paid for their house 30 years ago and their first mortgage payment.

Even without the low rates we have today, they had a very nice mortgages imagine.