Forum Replies Created
-
AuthorPosts
-
blahblahblah
ParticipantGet that out of your head right now because is completely wrong.
I hope you’re right. Still, there are two possible ways this can play out — inflationary or deflationary. Right now it is headed towards the deflationary scenario with each fed rate cut. But an inflationary scenario is always possible. Remember that salaries increase only nominally in an inflationary environment, and that companies will be receiving inflated nominal values for their products as well. In a high-inflation environment, salaries and prices can be constant or even decreasing in real terms. Inflation is an easy and ever-popular way for governments to get rid of debt, by reducing the value of the currency the debt is denominated in. That’s why I’m so suspicious that the guys running the show will choose that old favorite from the playbook…
ParticipantGet that out of your head right now because is completely wrong.
I hope you’re right. Still, there are two possible ways this can play out — inflationary or deflationary. Right now it is headed towards the deflationary scenario with each fed rate cut. But an inflationary scenario is always possible. Remember that salaries increase only nominally in an inflationary environment, and that companies will be receiving inflated nominal values for their products as well. In a high-inflation environment, salaries and prices can be constant or even decreasing in real terms. Inflation is an easy and ever-popular way for governments to get rid of debt, by reducing the value of the currency the debt is denominated in. That’s why I’m so suspicious that the guys running the show will choose that old favorite from the playbook…
ParticipantGet that out of your head right now because is completely wrong.
I hope you’re right. Still, there are two possible ways this can play out — inflationary or deflationary. Right now it is headed towards the deflationary scenario with each fed rate cut. But an inflationary scenario is always possible. Remember that salaries increase only nominally in an inflationary environment, and that companies will be receiving inflated nominal values for their products as well. In a high-inflation environment, salaries and prices can be constant or even decreasing in real terms. Inflation is an easy and ever-popular way for governments to get rid of debt, by reducing the value of the currency the debt is denominated in. That’s why I’m so suspicious that the guys running the show will choose that old favorite from the playbook…
ParticipantHigh interest rates do not mean high prices.
Certainly high interest rates will exert downward pressure on prices of those goods which are purchased on credit. However, interest rates are high in inflationary environments (like the US in the 70s). Although salaries lag inflation, they eventually catch up. I know this isn’t a pleasant thought but it may occur, especially since the US is so dependent on capital inflow from foreign countries. If they want to keep selling t-bills, they won’t be able to keep rates low forever.
ParticipantHigh interest rates do not mean high prices.
Certainly high interest rates will exert downward pressure on prices of those goods which are purchased on credit. However, interest rates are high in inflationary environments (like the US in the 70s). Although salaries lag inflation, they eventually catch up. I know this isn’t a pleasant thought but it may occur, especially since the US is so dependent on capital inflow from foreign countries. If they want to keep selling t-bills, they won’t be able to keep rates low forever.
ParticipantHigh interest rates do not mean high prices.
Certainly high interest rates will exert downward pressure on prices of those goods which are purchased on credit. However, interest rates are high in inflationary environments (like the US in the 70s). Although salaries lag inflation, they eventually catch up. I know this isn’t a pleasant thought but it may occur, especially since the US is so dependent on capital inflow from foreign countries. If they want to keep selling t-bills, they won’t be able to keep rates low forever.
ParticipantHigh interest rates do not mean high prices.
Certainly high interest rates will exert downward pressure on prices of those goods which are purchased on credit. However, interest rates are high in inflationary environments (like the US in the 70s). Although salaries lag inflation, they eventually catch up. I know this isn’t a pleasant thought but it may occur, especially since the US is so dependent on capital inflow from foreign countries. If they want to keep selling t-bills, they won’t be able to keep rates low forever.
ParticipantHigh interest rates do not mean high prices.
Certainly high interest rates will exert downward pressure on prices of those goods which are purchased on credit. However, interest rates are high in inflationary environments (like the US in the 70s). Although salaries lag inflation, they eventually catch up. I know this isn’t a pleasant thought but it may occur, especially since the US is so dependent on capital inflow from foreign countries. If they want to keep selling t-bills, they won’t be able to keep rates low forever.
ParticipantThis is a very interesting topic and I’ve been thinking about the same thing. If interest rates go back up, home prices will need to come down. However, interest rates won’t go up unless we are in an inflationary environment. In an inflationary environment, salaries will increase too so that will put upward pressure again on home prices. It could very well be that the guy who buys today at a 20% nominal discount from the 2005 peak with a very low fixed interest rate could come out ahead of someone buying two years from now with a much higher rate, even though the nominal price might fall a bit between now and then.
I’m as much of a bear as anyone, but just such a scenario is worrying me a bit. I think the government is going to try to spend their way out of this mess with bailouts, new government programs and defense spending, etc… All of these will devalue the currency and would be inflationary. I hope I’m wrong…
ParticipantThis is a very interesting topic and I’ve been thinking about the same thing. If interest rates go back up, home prices will need to come down. However, interest rates won’t go up unless we are in an inflationary environment. In an inflationary environment, salaries will increase too so that will put upward pressure again on home prices. It could very well be that the guy who buys today at a 20% nominal discount from the 2005 peak with a very low fixed interest rate could come out ahead of someone buying two years from now with a much higher rate, even though the nominal price might fall a bit between now and then.
I’m as much of a bear as anyone, but just such a scenario is worrying me a bit. I think the government is going to try to spend their way out of this mess with bailouts, new government programs and defense spending, etc… All of these will devalue the currency and would be inflationary. I hope I’m wrong…
ParticipantThis is a very interesting topic and I’ve been thinking about the same thing. If interest rates go back up, home prices will need to come down. However, interest rates won’t go up unless we are in an inflationary environment. In an inflationary environment, salaries will increase too so that will put upward pressure again on home prices. It could very well be that the guy who buys today at a 20% nominal discount from the 2005 peak with a very low fixed interest rate could come out ahead of someone buying two years from now with a much higher rate, even though the nominal price might fall a bit between now and then.
I’m as much of a bear as anyone, but just such a scenario is worrying me a bit. I think the government is going to try to spend their way out of this mess with bailouts, new government programs and defense spending, etc… All of these will devalue the currency and would be inflationary. I hope I’m wrong…
ParticipantThis is a very interesting topic and I’ve been thinking about the same thing. If interest rates go back up, home prices will need to come down. However, interest rates won’t go up unless we are in an inflationary environment. In an inflationary environment, salaries will increase too so that will put upward pressure again on home prices. It could very well be that the guy who buys today at a 20% nominal discount from the 2005 peak with a very low fixed interest rate could come out ahead of someone buying two years from now with a much higher rate, even though the nominal price might fall a bit between now and then.
I’m as much of a bear as anyone, but just such a scenario is worrying me a bit. I think the government is going to try to spend their way out of this mess with bailouts, new government programs and defense spending, etc… All of these will devalue the currency and would be inflationary. I hope I’m wrong…
ParticipantThis is a very interesting topic and I’ve been thinking about the same thing. If interest rates go back up, home prices will need to come down. However, interest rates won’t go up unless we are in an inflationary environment. In an inflationary environment, salaries will increase too so that will put upward pressure again on home prices. It could very well be that the guy who buys today at a 20% nominal discount from the 2005 peak with a very low fixed interest rate could come out ahead of someone buying two years from now with a much higher rate, even though the nominal price might fall a bit between now and then.
I’m as much of a bear as anyone, but just such a scenario is worrying me a bit. I think the government is going to try to spend their way out of this mess with bailouts, new government programs and defense spending, etc… All of these will devalue the currency and would be inflationary. I hope I’m wrong…
ParticipantSigh. Where does it all end then? We had stupid lending which led to this housing bubble, people getting greedy and buying beyond their means (no fat government salary here), but inflation, the real one, will keep this house and many others at a high level? So are these prices “real?”
Man I wish I knew where this was gonna end. It can’t end well. The only things I know for sure are that a lot of people with way more money and power than yours truly have a vested interest in keeping this charade going as long as possible and that this country is unique in its ability to print currency backed by nothing that everyone else in the world is obliged to accept. Nothing about this scenario is “real” in any sense of the word.
It has been touched on in other threads on this site that the concept of homeowning in this country may become sort of a lifetime rental arrangement from the bank. Meaning, your average “homeowner” will never pay off their mortgage. Note that in many other countries (in south america for example) there are not really mortgage loans as in the US. People pay cash for homes or they don’t get to buy them at all. It used to be that way here in the US, too. For a few decades, mortgages were very effective in allowing a large number of citizens to own property but I’m worried that those days may be over. Remember that the powers that be don’t want you and I to own property. They want us to be indebted for our entire lives. If we’re not paying interest to them, they’re not getting paid. When they’re not getting paid, they get upset. And when they get upset, watch out.
Depressing, isn’t it! Of course I could be wrong. I HOPE I’m wrong!
-
AuthorPosts
