Wise Accounts Blog

What about if we were to cancel all debts every 50 years? Wouldn't you love to take up a huge mortgage just a couple of years before? Could you get away with it?

In biblical times the flip side of the jubilee was also that everyone had to return to the original property of his clan. So buying a field just seven years before the jubilee was cheap because you could only get seven harvests before having to hand it back as opposed to say buying it twenty years before the jubilee. In the Middle East people have an attachment to the land.

The concept of usury exploded when the Reformation broke away from Roman Catholicism. More broadly you lend money freely to your family members (whom you trust or at least have means of recourse) but you charge interest to strangers (who present a risk).

Inflation is an incentive to borrow. Buy a house today on borrowed money while ten years later it may have doubled in value.

Inflation is a way to rob workers of a recent rise in wages. As the cost of goods rise their purchasing power is back to where it was before or worse.

Too much inflation creates shortages of staple supplies as people are hoarding in fear.

Hyperinflation in Zimbabwe began in the early 2000s, shortly after Zimbabwe's confiscation of white-owned farmland and its repudiation of debts to the International Monetary Fund.

The opposite - deflation is quite interesting. People stop buying; thinking goods will fall in price as time goes by.

A similar setup is for electronic goods which decrease in price due to advances in technology. The early nerds pay a premium to show-off their new gadget while the masses are waiting for prices to come down to embrace the new lifestyle.

There is some concern that the USA might follow the path of Japan into the deflationary abyss.

The Japanese asset price bubble was an economic bubble in Japan from 1986 to 1991, in which real estate and stock prices greatly inflated. The bubble's collapse lasted for more than a decade with stock prices bottoming in 2003, until hitting an even lower low amidst the current global crisis in 2008. The Japanese asset price bubble contributed to what the Japanese refer to as the Lost Decade.

Sales of existing homes in the US plummeted 27 per cent in July, to their lowest level in a decade.

As you know history has a habit of repeating itself. So count your blessings while they last.

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