Inflation at 10000%

**andy** · 5 July 2007, 12:57

How do they work out inflation of 10000%
If you buy bread for one pound today , will it be £833 after one month ?

**dang65** · 5 July 2007, 12:58

I'm a financial retard. Can someone explain to me what happens to existing loans, like mortgages or car loans, when hyper-inflation hits. I mean, could you, say, sell a potato and have enough to pay off your mortgage, or does the interest on your mortgage hyper-inflate at the same time?

**Zorba** · 5 July 2007, 13:07

Originally posted by dang65

I'm a financial retard. Can someone explain to me what happens to existing loans, like mortgages or car loans, when hyper-inflation hits. I mean, could you, say, sell a potato and have enough to pay off your mortgage, or does the interest on your mortgage hyper-inflate at the same time?

I believe it would depend if that mortgage is fixed rate or not. Plus, the situation that led to such a level of inflation would mean that you would not be prepared to sell that potato, as it's the only one left in your region.

**zathras** · 5 July 2007, 13:09

Originally posted by dang65

I'm a financial retard. Can someone explain to me what happens to existing loans, like mortgages or car loans, when hyper-inflation hits. I mean, could you, say, sell a potato and have enough to pay off your mortgage, or does the interest on your mortgage hyper-inflate at the same time?

Well back in the hyper inflation days in Germany the price of a coffee would change from the time it was poured into the cup and you got to the till to pay for it. Sometimes magnitudes long.

**MrRobin** · 5 July 2007, 13:14

Originally posted by andy

How do they work out inflation of 10000%
If you buy bread for one pound today , will it be £833 after one month ?

Nope, it would be £1.47 after 1 month.

(10000% to the power of 1 twelth) x £1.00

**andy** · 5 July 2007, 13:44

Originally posted by MrRobin

Nope, it would be £1.47 after 1 month.

(10000% to the power of 1 twelth) x £1.00

No its not .
£1.47 means a 47% increase in a month and 564% in a year

**MrRobin** · 5 July 2007, 13:49

Originally posted by andy

No its not .
£1.47 means a 47% increase in a month and 564% in a year

Haven't heard of compound interest then?

**Lucy** · 5 July 2007, 13:59

If I won the lottery I would find a way of taking out Mugabee. (And Ken)

**wendigo100** · 5 July 2007, 14:26

Originally posted by Lucy

If I won the lottery I would find a way of taking out Mugabee. (And Ken)

Very charitable of you. Where to?

Inflation at 10000%