Yeah, I was talking about nominal rents, which are very sticky on the way down (or not down, as the case may be). If inflation is 3% and your rent stays the same, do you feel any richer? I wouldn’t. But that’s just me.
I try to think in real terms, which are a function of supply and demand; hence, my focus on real rents. One must acknowledge the past effects of inflation, hence, the importance of looking at nominal rents, too. You’re right, FSD.
But, for forecasting purposes, I focus on real prices/rents. Inflation will be going up (when the Chinese and Japanese abandon and repatriate their dollars) and down (after the dollar ceases to exist as we know it). How long to go through the cycles of up and down, who knows. It is much too confusing to try to predict and account for inflation in medium-term/long-term forecasts.
I think it is one of several reasonable scenarios. My guess if this were to come to pass is that it would take 5 years rather than 3 for 20% plus rent and 20% minus prices.
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