Here Lies the American Dream

[sdduuuude]

Exactly CONCHO.

[sdduuuude]

Exactly CONCHO.

[uncomfortably numb]

The disconnect between rents and ownership is that nobody is providing capital (creating money) for the renter. Keep in mind that rents are really high too, it just doesn’t seem that way because real estate prices are so absurd. And, as was mentioned, it does work itself out in the long run.

[uncomfortably numb]

The disconnect between rents and ownership is that nobody is providing capital (creating money) for the renter. Keep in mind that rents are really high too, it just doesn’t seem that way because real estate prices are so absurd. And, as was mentioned, it does work itself out in the long run.

[sdduuuude]

I agree – the cause is the availability of capital, not the value of currency. They are different.

Money supply does not have to increase in order for captial markets to open up.

If the decreasing value of currency was the cause of house price inflation, we would see an increase in both rent and home values because they are tied to the same value of use and the same currency and, to some extent, the same supply.

I’m not saying “There is no currency inflation.” I’m just saying that currency inflation is not the exclusive or even major cause of this housing bubble.

If you believe it is, then you must believe that as housing prices come down, the value of your dollar is increasing, which it won’t be.

You must believe that as capital markets tighten up (fewer people willing to lend money), it is because the dollar has become more valuable.

I think captital markets will tighten up and the value of the dollar will continue to decline. Thus, housing prices will fall, rents will increase, and eventually they will meet. i.e. Availability of capital will affect house prices more so than the value of the dollar, and inflation will continue to bring rents up.

[sdduuuude]

I agree – the cause is the availability of capital, not the value of currency. They are different.

Money supply does not have to increase in order for captial markets to open up.

If the decreasing value of currency was the cause of house price inflation, we would see an increase in both rent and home values because they are tied to the same value of use and the same currency and, to some extent, the same supply.

I’m not saying “There is no currency inflation.” I’m just saying that currency inflation is not the exclusive or even major cause of this housing bubble.

If you believe it is, then you must believe that as housing prices come down, the value of your dollar is increasing, which it won’t be.

You must believe that as capital markets tighten up (fewer people willing to lend money), it is because the dollar has become more valuable.

I think captital markets will tighten up and the value of the dollar will continue to decline. Thus, housing prices will fall, rents will increase, and eventually they will meet. i.e. Availability of capital will affect house prices more so than the value of the dollar, and inflation will continue to bring rents up.

[uncomfortably numb]

As the money supply increases, the value of the currency decreases. And as the price of housing comes down, the value of the housing dollar does increase (all things being equal).

Currency [dollar defined assets] inflation (increased money supply) is exactly what the housing bubble is.

Capital markets will tighten up and the value of the dollar will continue to decline, but remember, the value of the dollar you refer to is relative to other currencies and commodities. The housing dollar (the amount of house a dollar will purchase) will not decline, it will rise.

[uncomfortably numb]

As the money supply increases, the value of the currency decreases. And as the price of housing comes down, the value of the housing dollar does increase (all things being equal).

Currency [dollar defined assets] inflation (increased money supply) is exactly what the housing bubble is.

Capital markets will tighten up and the value of the dollar will continue to decline, but remember, the value of the dollar you refer to is relative to other currencies and commodities. The housing dollar (the amount of house a dollar will purchase) will not decline, it will rise.

[sdduuuude]

So, you are saying the dollar will decline, but the (newly invented term) housing dollar will rise.

And that currency inflation is what the housing bubble is, but when the housing bubble deflates, the currency will continue to inflate.

I think I have nothing left to say.
I’m in a battle of economic wits with an unarmed person.

[sdduuuude]

So, you are saying the dollar will decline, but the (newly invented term) housing dollar will rise.

And that currency inflation is what the housing bubble is, but when the housing bubble deflates, the currency will continue to inflate.

I think I have nothing left to say.
I’m in a battle of economic wits with an unarmed person.

[patientrenter]

uncomfortably numb,

I like your inflation and money supply explanations, but is what you’re saying equivalent to:

1. So Cal house prices (in dollars) went up because of easy money and will go down because there will be less easy money

2. When prices went up, sellers and the RE industry won immediate gains at the expense of buyers’ future spending power

3. One dollar will buy less foreign currency in the future

Or is there more?

Patient renter in OC

[patientrenter]

uncomfortably numb,

I like your inflation and money supply explanations, but is what you’re saying equivalent to:

1. So Cal house prices (in dollars) went up because of easy money and will go down because there will be less easy money

2. When prices went up, sellers and the RE industry won immediate gains at the expense of buyers’ future spending power

3. One dollar will buy less foreign currency in the future

Or is there more?

Patient renter in OC

[uncomfortably numb]

sdduuuude,
Money is simply an exchange medium. What a dollar will buy in housing is not equivalent to what it will by in other sectors of the economy because lots of dollars are available for housing. So there is, albeit virtually, a housing dollar. The dollar can decline (in value) versus other currencies yet still buy more house (in the U.S.).

Again, money is another way to express the value of the house. As the money supply goes up or down, the currency (used to buy housing) inflates (worth less)/deflates (worth more).

Btw, your insults fail to aid your arguments.

[uncomfortably numb]

sdduuuude,
Money is simply an exchange medium. What a dollar will buy in housing is not equivalent to what it will by in other sectors of the economy because lots of dollars are available for housing. So there is, albeit virtually, a housing dollar. The dollar can decline (in value) versus other currencies yet still buy more house (in the U.S.).

Again, money is another way to express the value of the house. As the money supply goes up or down, the currency (used to buy housing) inflates (worth less)/deflates (worth more).

Btw, your insults fail to aid your arguments.

[uncomfortably numb]

patientrenter,
The value of the currency is everything. That’s why the Fed has complete control over it. Interest rates control it’s value as does the money supply itself. It all comes down to how much labor is what currency going to buy. If you understand this, you understand the forces which control the value of money.

[Author]

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