[PlannerBee]

Lets say I have $15000 in US dollars and I want to go to my bank tomorrow and withdraw it to pay off a loan that I owe that amount on but something happens on the way to the bank (this is hypothetical). I get there and they say my $15000 is now worth only $5000. Would I still owe $15000 to my lender or $5000?

[MacG]

A factor of three? Guess you would owe 45000...

[Sparaxis]

You would still owe the same amount and you would get the same amount of money to pay it off. The "something happened" could be hyperinflation, such that your 15k can only buy 5k worth of goods now. But the loan is based on nominal dollars, not the value of the dollar.

Inflation is kind to debtors since it reduces their debt burden (assuming their income rises commensurately). That's a reason why, given the current US public debt burden, that an inflationary future seems more likely than a deflationary one.

[MonteQuest]

Correct. Remember Wimpy from Popeye?

"I'll gladly pay you Tuesday for a hamburger today."

$this->bbcode_second_pass_quote('Montequest', 'I')t is interesting to note that a devaluation of the dollar is technically the same as the USA defaulting on it's debts. Why? Because as the dollar declines, its purchasing power for the holder of dollar denominated debt drops as well.

For example, Wimpy buys hamburgers from the EU in dollars. The EU loans Wimpy $10 on Friday to buy two hamburgers until next Tuesday. On Tuesday Wimpy pays the EU back the $10, but over the weekend, the dollar declines 50% against the euro. The EU is technically paid back, but now the $10 will only buy one hamburger.

[GoIllini]

$this->bbcode_second_pass_quote('PlannerBee', 'L')ets say I have $15000 in US dollars and I want to go to my bank tomorrow and withdraw it to pay off a loan that I owe that amount on but something happens on the way to the bank (this is hypothetical). I get there and they say my $15000 is now worth only $5000. Would I still owe $15000 to my lender or $5000?

[bartholland]

$this->bbcode_second_pass_quote('', 'L')ets say I have $15000 in US dollars and I want to go to my bank tomorrow and withdraw it to pay off a loan that I owe that amount on but something happens on the way to the bank (this is hypothetical). I get there and they say my $15000 is now worth only $5000. Would I still owe $15000 to my lender or $5000?