[quote=SD Realtor]AN I also dream about the days of high rates to buy bonds. However with those days we saw inflation and mortgage rates that would make you cry. Not to mention credit for business loans. Not fun times man.[/quote]As long as it doesn’t turn into hyperinflation where I’d have to cart around a wheel barrel to buy a loaf of bread, then I think I’m better off with high inflation vs high deflation (based on my calculation and assumptions). Just look at past data: http://www.census.gov/hhes/www/housing/census/historic/values.html, look where CA housing price was in 1970 and where it was in 1980. Not adjusted for inflation, it went from $23,100 to $84,500 in just 10 years. I can only dream we’ll see that again. If history repeats itself and we’ll see the 70s/80s again, can you imagine back then buying a couple of median priced houses in 1970 and selling in 1980 for over 3.5x more? Then take that $150k gain and buy a 30 years CD in the mid teens? If you put $150k in a 30 years CD making 15%, that $150k will be about $9.9M today.
Just for fun, I ran the scenario I just described above but use today’s housing price instead. Lets assume you have 2 houses that averages out to be $350k/house. If price goes up 3.5x, those two houses will be worth ~$2.45M. If you then put that in a 30 years CD making 15%, that $2.45M will be at $162M after 30 years. Man, old folks seems have all the luck. Hopefully us Gen X/Y will get to see some of that luck someday soon.
