This is a very layman's understanding, so take it with a grain of salt.
If you have a ton of cash on hand when markets go to shit and interest rates go through the roof you suddenly have something no one else does: cash on hand that was traded when that dollar was worth less. When you buy property or stock with that money, you've effectively bought it at a hefty discount. When the markets and interest rates normalize again you stand to make huge gains.
They lock up financing to put a cap on growing inflation, but that same cap stops people from taking advantage of the market and thereby continuing inflation through a new avenue.
Interesting. What you say is true, but there is an opposing force. If someone has cash on hand when interest rates spike, they can buy when everyone else has a much harder time getting loans. So this makes things appear cheaper because there are less buyers on the market.
BUT the opposing force is the inflation that originally justified the spike in interest rates. That cash they are holding is simultaneously worth less due to the devaluing of the dollar, but also enables you to operate when others have run dry.
EDIT: so I guess there is a distinction in the value of the dollar when you are using it to buy large things that require debt vs the day to day little items. Because the little items will get inflated easily as everyone allocates their limited capital to food and fuel. But the real estate market will stagnate as no one can trade houses around in this environment.
I agree with what you put here; I think there's also a "threshold" of cash on hand you have to have in order for it to be useful in the ways we're describing. It's likely a rather large sum.
If you have a ton of cash on hand when markets go to shit and interest rates go through the roof you suddenly have something no one else does: cash on hand that was traded when that dollar was worth less. When you buy property or stock with that money, you've effectively bought it at a hefty discount. When the markets and interest rates normalize again you stand to make huge gains.
They lock up financing to put a cap on growing inflation, but that same cap stops people from taking advantage of the market and thereby continuing inflation through a new avenue.