My reasoning for a 90% drop is simple: the entire economy of the world is based on unlimited amounts of “liquidity” flooding out of the Federal Reserve. As explained by the Austrian School of economics, every great inflation must end in one of two ways:
1. They will stop printing money due to fear of hyperinflation. This will cause a crash in all assets dependent on inflation, and the most illiquid, i.e., real estate, will go down the most due to the attempt to raise cash. See the Great Depression for an example.
2. They will keep printing money even in the face of rejection by the market. This will cause the complete destruction of the “dollar” and end the division of labor in this country (and probably many others as well). In that case, of course nominal prices for real estate, as for every other asset except bonds, will soar, but prices in real money (i.e., gold) will decline dramatically. See any hyperinflation for an example.
The main question, of course, is timing. Looking at the disastrous trends in the federal budget, even with all the tricks they can come up with to make it look better, I believe that we are near the beginning of the runaway part of the inflation. So I don’t think it will be more than a few more years, probably less than five.
