There actually was a time when people incinerated their cash. Some even used it as wallpaper because the money was worthless. It was in the Weimar Republic in Germany during the 1920s, when hyperinflation plagued the country.Hyperinflation is when the prices of most goods and services shoot up while the Federal government prints and prints and prints money to pay for its spending. The result leaves the currency a fraction of what it used to be worth.
Fortunately, inflation isn’t skyrocketing. Freddie Mac chief economist Franck Nothaft has said, “The latest economic indicators point toward low inflation.
But the government has printed a lot of money for its quantitative easing programs.
How does all of this impact you?
Right now, inflation is helping keep mortgage rates low. Obviously, lower rates mean lower monthly payments for homeowners with mortgages. However, there are also indications that inflation is inching back up. If inflation became a problem, mortgage rates most likely would rise. Typically, as inflation goes up, mortgage rates follow.
Good news, though. Rates are low NOW, and as Nothaft said, inflation is low. All good things.