What Happens To Real Estate When The Dollar Dies?
The U.S. government is over $34 trillion in debt, and now interest payments have surpassed military spending. History shows what comes next: money printing, inflation, and eventually, financial repression. But in every crisis lies opportunity… if you know how to position yourself.
Summary
This text discusses the potential impact on real estate if the US dollar loses its value or “dies.”
Highlights
- The core topic is the uncertain future of real estate in a scenario where the US dollar’s value collapses.
- The article explores the potential ramifications for property values and the overall housing market.
- It implicitly discusses alternative currencies or assets that might become more attractive than real estate in such a situation.
- The question “What Happens To Real Estate When the Dollar Dies?” suggests an exploration of worst-case scenarios and possible investment strategies.
- ⚠️ It implies a warning about the potential risks to real estate holdings if the dollar’s dominance falters.
the US government is over 34 trillion in debt and now the interest payments are higher than our military spending so let me ask you what happens to real estate when the dollar dies we’ve seen this movie before when the government prints like crazy and the confidence cracks many times sending the currencies into collapse but chaos that’s where the biggest opportunities are made and today I’ll show you what it means for the real estate industry let’s start with the fundamentals the US debt to GDP is exploding it’s
unsustainable and here’s the issue the Treasury cannot raise interest rates without tanking the economy but if they don’t inflation gets out of control either way the Fed is boxed in and foreign buyers like China and Japan they’re pulling back from the US Treasuries and they’re definitely not showing up like they used to so what happens next defaulting is political suicide and that’s why inflation is the silent option this next chapter is going to be financial repression a slow steady squeeze where inflation chips away at
everyone’s wealth and the American public so let me tell you about Hugo Stennis a man who became the richest person in Germany because of hyperinflation after World War I Germany was buried in debt by 1921 their currency had all collapsed but Hugo he saw it coming he borrowed massive amounts of paper marks which was worthless currency and he bought real assets he bought mines factories and real estate as inflation exploded the debt became worthless but the assets skyrocketed in value what’s the lesson here he used debt like a weapon and
inflation did the rest does this sound familiar now is the US like Weimar Germany no but the mechanics and the fundamentals they’re eerily similar it’s not about hyperinflation this is about financial engineering and one of the most powerful tools that the wealthy use whether they know it or not is something they call inflation induced debt destruction and here’s how it works let’s say you lock a 30-year fixed mortgage at 2% which I know is low but just go with me so now inflation’s running 4% year-over-year that means
that every dollar you repay in the future is worth less than every dollar that you borrowed you’re paying the bank back with cheaper money and over time that 2% gets erased by inflation even at 6 or 7% mortgage rates like today if inflation is running above that you’re still winning and that just happened just a year and a half ago why because inflation is outpacing your debt cost your real cost of borrowing is negative that’s the key you don’t need hyperinflation you don’t need a wheelbarrow full of paper money all you
need is time fixed rate debt and a system that keeps on printing when inflation is high and you owe money on fixed terms you’re getting wealthier each and every month without doing a thing that’s inflation induced debt destruction so how does real estate fit into all of this number one rents rise inflation means higher costs which puts the pressure right on the people who supply housing making them pull back from the supply itself which of course when there’s more demand than supply rents rise so if you own rental property
you’re going to be in a very good spot two debt gets destroyed if you lock the 30-year mortgage at 3% which a lot of people have today uh inflation is eroding your debt each and every year three asset prices inflate real estate is a hard asset and it is a store of value but there is a catch if you’re overleveraged have a floating rate or facing a refinance you could get crushed which is exactly what’s happening to a lot of people right now real estate only wins if you’re positioned correctly you need to be in long-term fixed rate debt
you need to have positive cash flow and I always talk about this do not buy for capital gains four need to be in growing markets with stable demand and that’s pretty easy to figure out when you just look at the migration patterns of where people are moving this is why I say buy on fundamentals and not on emotion because at the end of the day it is just math so what do you do now lock in to fixed rate debt it could be 20 30 40 years it doesn’t really matter do not wait for its perfect timing lock it in and let inflation do its thing you can
always refinance if rates go down but you hedge if they go up two focus on workforce housing forget luxury focus on where people live go to places with positive job growth and limited supply three avoid bridge debt and short-term financing this is not the time to gamble and nobody really knows what’s going to happen in the future four build reserves markets are volatile so you need to be ready and you need to have the cash to get you through the downtimes five buy in markets with wage growth but because oftent times if you’re buying where
wages are rising you’re going to have a better tenant a more stable occupancy and less bad debt just like their own debt the Fed has to inflate away the debt if the Fed has to inflate away the debt and you’ve got a 3% mortgage you’re printing wealth just like the Treasury and here’s what most people get wrong during a crisis they hoard cash now mind you I totally get the fact that you do need some reserves if the dollar is devaluing and cash is melting like an ice cube debt on the other hand it gets cheaper with time picture this one guy
saves 100 grand in cash the other guy borrows $1 million for real estate who wins the guy who saves loses slowly because of the inflation the guy who borrows smartly wins because the cost of the debt goes down over time because he’s paying it back with cheaper dollars so if you want to build wealth while the dollar is dying you have to think differently use inflation don’t fight it own assets borrow wisely and play for the long term because when currencies collapse it’s not the end for those who are ready this will be once in a
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