What if Hyperinflation Takes Hold?

Larry Anweiler, a full time faculty member at Kaplan University.

ORLANDO—2016 is the year to buy real estate . So says Larry Anweiler , a full time faculty member at Kaplan University . Anweiler, who teaches in the university’s real estate degree program, is pointing to shaky foreign markets and hyperinflation possibilities to back up his assertion. GlobeSt.com caught up with Anweiler in part one of this exclusive interview to get a deeper explanation. GlobeSt.com: How do shaky foreign markets translate to brighter commercial real estate prospects? Anweiler: The United States market may face both brighter prospects and increased challenges over the next few years. Investors fleeing declining world economies—Asian markets decline, along with the European Markets, and as the Middle East turmoil grows in its severity—may reinvest their capital in US companies with a more stable economic basis. This in turn will lower excess human capital—in the form of higher employment rates—and could trigger the type of hyperinflation not seen since the early 1980s GlobeSt.com: How would hyperinflation fold into the mix? Anweiler: Through its expanded borrowing and money printing, which has more than doubled US government debt since 2008, the Fed has saturated the market with additional cash in its attempt to fend off the economic meltdown caused by the mortgage bond market. This money has essentially stayed in the hands of big business that used the capital to expand and modernize operations. However, as economic recovery takes hold, and idle capital—in the form of unused labor—decreases, consumer spending could increase to the point where hyperinflation may occur. This may be the reason the Federal Reserve is pushing so hard to increase interest rates in an attempt to head off economic conditions that would set off spiraling inflation. For investors, few asset holdings maintain their values during times of hyperinflation. As a group, fixed assets perform very well during inflationary periods. Assets within this category include precious metals, such as gold and silver, and real estate also falls within this category.  For those who buy real estate early with fixed financing, investors could see asset prices double within a very short period of time.  Evidence of this phenomenon in fixed asset values, can be found by looking at historical trends within the fixed asset category during the early 1980s. If hyperinflation does take hold over the next few years, those who buy real estate today could find substantial wealth in their future.