Houses are immovable objects and they should be valued with respect to local incomes.
–You say incomes, I say gold/silver/oil/commodities. It doesn’t matter which. Nominal incomes will have to go up sooner or later; you can’t dissociate incomes from commodity prices or consumer prices. I’m not saying that higher nominal incomes will make us better off: inflation will more than offset nominal income gains (because of the weak dollar).
Popular but false sentiment. There has been very little money-printing since 2005.
–By ‘printing presses’ I was using a metaphor. The Fed increases the money supply by lowering the discount rate, the federal funds rate, making the discount window more attractive, or by offering to swap hundred of billions of US Treasury securities for other toxic debt, ad announced this week.
Who’s being robbed? I’m not being robbed. Most of my money is in things like FXE. There’s no monetary inflation. There’s just flight from the dollar.
–You haven’t been to a grocery store or a gas station lately. Most prices are going up at a faster rate than any time since the late 80s, the 90s, or early 2000s. Savers who have saved dollars are being robbed (again, metaphorically!) every time their dollars buy less at the supermarket, the department store, and the gas station, to mention a few places. And you still say there’s no inflation??
The US dollar is extremely overvalued. Trade deficit of 6% of GDP is proof. Sooner or later it had to devalue on its own.
–So, you agree that the dollar has even more pressure to go down, that is, to devalue. That’s what I’ve been saying all along: a weaker, and rapidly weakening dollar, will reduce the housing price/rent and price/income ratios faster than many had anticipated. House prices will still drop some more, but I think we have the end of the correction around the corner. Which is bad news to me because it’s being achieved at the expense of the dollar.
