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To: BiglyCommentary
The most obvious “hedging technique” is for the bank to sell the mortgage paper to someone who will embed it in a CDO and sell that off to investors. That’s what happened to my mortgage before I even made the first payment.

The point is that SOMEONE is sitting there with a 3% investment that is basically paying a negative interest rate when you account for inflation. And they’re stuck with it for the next 30 years if I live long enough to see the end of it and I don’t move.

67 posted on 04/16/2022 4:59:57 AM PDT by Alberta's Child ("Mr. Potato Head ... Mr. Potato Head! Back doors are not secrets.")
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To: Alberta's Child

That is not a hedging technique by definition. If you dont own the “thing”, you are out, there is no risk to hedge.

Plus you are confusing monetary inflation with demand/supply price increases. Investors focus on mainly the former when loaning money “If I loan X number of dollars, what will those dollars be worth when I am repaid”.


68 posted on 04/16/2022 5:30:52 AM PDT by BiglyCommentary
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To: Alberta's Child

Your 8% inflation is today. Bond holders forecast what it will be over a 20 or 30 year bond period. Does a startup business base a 20 year business plan on what the P&L will be in year one? No of course not.


69 posted on 04/16/2022 5:40:19 AM PDT by BiglyCommentary
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