I’m not really saying inflation should show up in higher wages.
One of the many reasons why I posted that is this – if you don’t think housing prices will rise with inflation, don’t post an article which uses that assumption to support your case.
Now, I hope you understand I’m not bagging on you as a person, but I am going to come down pretty hard on your analysis. Like my tone or hate it, I feel people need to understand your 50% number is nothing but a guess.
Again – you add a good perspective and lots of interesting links to this forum, but what you don’t add is good analysis to support your assertions.
Your 50% number is, in my opinion, completely unsupported. I’m not saying it is unsupporatble, I’m just saying you have not done the analysis, complete with a list of assumptions, that generates the number “50%”.
I know you haven’t done the analysis because you are “100% confident.” When one does a good analysis, they make assumptions, do the calculations, then take their assumptions and ask “what if this doesn’t happen the way I think.” Note how I changed the inflation figure, just to get an understanding of how much risk there was in the analysis. If I change the inflation figure dramatically and the end result doesn’t change much, I know there isn’t much risk there.
If you had done an analysis you would say “I think it is 50%, but the risks are x, y, and z.” But you don’t, you just claim 50% with full confidence. With a +/_ factor of 10 percentage points, you are saying 40-60% nominal or nearly 75% drop with respect to inflation. 75%? Its just too much, with no supporting analysis.
Your irreverence for the difficulty of macro economic anlysis is somewhat shocking. The best minds in the world have difficulty with it, but you read a few articles, and bam – you know with 100% confidence exactly what the market will do.
If I can do anything to reduce people’s confidence in that number, I’ll do it.
Keep in mind, I think you’ll do fine with selling your house and renting, then buying low. I did the same thing with an extra property. I’m just not a believer in massive risk-free gains or 100% certainty in ultra-complicated markets that rely on variables as disparate as people’s psychology, the price of gold, and the Bank of Japan.
