Bridger PenningtonFund Launch & Investment Expert

How Inflation Destroys Debt - Part 1 #shorts

31 Aug 2022 · 1 min

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0:33

Inflation erodes fixed-rate debt by letting you repay loans with cheaper dollars. A $30,000 mortgage from 1975 stayed $30,000 while the house climbed to $450,000, making the debt a fraction of what it was worth when borrowed.

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Inflation destroys debt, and here's why. So for example, if you bought a house in 1975, the average price was $40,000. Let's say you put $10,000 down and you borrowed $30,000 to buy this home. Fast forward 30 to 40 years, that house has inflated up to over $450,000. However, the debt is still only $30,000. You get to pay off old debts with today's dollars. Inflation is one of the greatest destroyers of debt.

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