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Diego Mamani
ParticipantSduuude, good question, but you’ve mischaracterized the essence of what I wrote. And I agree with you that that mischaracterization isn’t how the world works.
If the euro plummets, we need to ask two questions:
(1) Plummet against what? The dollar, oil/gold, or against both?; and more importantly
(2) Why does the euro plummet?If the euro plummets both against the dollar and against gold/silver/oil because of irresponsible monetary policies in Europe, then that shouldn’t affect house prices here. House (not apartment) rents will continue to increase with inflation until SFRs’ price/rent ratio gets back to its historical mean.
I understand that the thread’s title may have hurt sensibilities… I’m a housing bear myself, and I told everybody I knew to sell in 2005. I have a couple of co-workers who ignored me and bought houses at the peak of the bubble, and now they look embarrased when the issue is brought up (I never bring it up myself but they probably think of their $150k in lost equitty every time they see me). All I’m trying to say is that by accelerating domestic inflation, the Fed is seeking to restore the housing price/income and price/rent ratio by debasing the value of the dollar, as opposed to waiting for the adjustment to come from price drops only.
How do we know the dollar is being devaluated? Measure it in terms of precious metals, gold, and stable currencies like the Euro. Nominal house prices still have room to fall, but I can see the end of the adjustment now that I realize how little our dollars are worth compared to only 7 years ago.
ParticipantSduuude, good question, but you’ve mischaracterized the essence of what I wrote. And I agree with you that that mischaracterization isn’t how the world works.
If the euro plummets, we need to ask two questions:
(1) Plummet against what? The dollar, oil/gold, or against both?; and more importantly
(2) Why does the euro plummet?If the euro plummets both against the dollar and against gold/silver/oil because of irresponsible monetary policies in Europe, then that shouldn’t affect house prices here. House (not apartment) rents will continue to increase with inflation until SFRs’ price/rent ratio gets back to its historical mean.
I understand that the thread’s title may have hurt sensibilities… I’m a housing bear myself, and I told everybody I knew to sell in 2005. I have a couple of co-workers who ignored me and bought houses at the peak of the bubble, and now they look embarrased when the issue is brought up (I never bring it up myself but they probably think of their $150k in lost equitty every time they see me). All I’m trying to say is that by accelerating domestic inflation, the Fed is seeking to restore the housing price/income and price/rent ratio by debasing the value of the dollar, as opposed to waiting for the adjustment to come from price drops only.
How do we know the dollar is being devaluated? Measure it in terms of precious metals, gold, and stable currencies like the Euro. Nominal house prices still have room to fall, but I can see the end of the adjustment now that I realize how little our dollars are worth compared to only 7 years ago.
ParticipantSduuude, good question, but you’ve mischaracterized the essence of what I wrote. And I agree with you that that mischaracterization isn’t how the world works.
If the euro plummets, we need to ask two questions:
(1) Plummet against what? The dollar, oil/gold, or against both?; and more importantly
(2) Why does the euro plummet?If the euro plummets both against the dollar and against gold/silver/oil because of irresponsible monetary policies in Europe, then that shouldn’t affect house prices here. House (not apartment) rents will continue to increase with inflation until SFRs’ price/rent ratio gets back to its historical mean.
I understand that the thread’s title may have hurt sensibilities… I’m a housing bear myself, and I told everybody I knew to sell in 2005. I have a couple of co-workers who ignored me and bought houses at the peak of the bubble, and now they look embarrased when the issue is brought up (I never bring it up myself but they probably think of their $150k in lost equitty every time they see me). All I’m trying to say is that by accelerating domestic inflation, the Fed is seeking to restore the housing price/income and price/rent ratio by debasing the value of the dollar, as opposed to waiting for the adjustment to come from price drops only.
How do we know the dollar is being devaluated? Measure it in terms of precious metals, gold, and stable currencies like the Euro. Nominal house prices still have room to fall, but I can see the end of the adjustment now that I realize how little our dollars are worth compared to only 7 years ago.
ParticipantSduuude, good question, but you’ve mischaracterized the essence of what I wrote. And I agree with you that that mischaracterization isn’t how the world works.
If the euro plummets, we need to ask two questions:
(1) Plummet against what? The dollar, oil/gold, or against both?; and more importantly
(2) Why does the euro plummet?If the euro plummets both against the dollar and against gold/silver/oil because of irresponsible monetary policies in Europe, then that shouldn’t affect house prices here. House (not apartment) rents will continue to increase with inflation until SFRs’ price/rent ratio gets back to its historical mean.
I understand that the thread’s title may have hurt sensibilities… I’m a housing bear myself, and I told everybody I knew to sell in 2005. I have a couple of co-workers who ignored me and bought houses at the peak of the bubble, and now they look embarrased when the issue is brought up (I never bring it up myself but they probably think of their $150k in lost equitty every time they see me). All I’m trying to say is that by accelerating domestic inflation, the Fed is seeking to restore the housing price/income and price/rent ratio by debasing the value of the dollar, as opposed to waiting for the adjustment to come from price drops only.
How do we know the dollar is being devaluated? Measure it in terms of precious metals, gold, and stable currencies like the Euro. Nominal house prices still have room to fall, but I can see the end of the adjustment now that I realize how little our dollars are worth compared to only 7 years ago.
ParticipantWhy the Euro?
The peso is the currency of many countries, including the Philippines. You knew that, right? Which country were you referring to? I’m sure you also know what the euro is.
The European Union, whose currency is the euro, had a GDP of almost US$17 trillion in 2007, amounting to 31% of the world’s total. (The US GDP was only 14 trillion). The EU is the largest exporter of goods, the second largest importer, and the biggest trading partner to several countries such as the United States and China. 163 of the top 500 largest corporations measured by revenue (Fortune Global 500) have their headquarters in the EU.
Former Fed Chairman Alan Greenspan said in 2007 that it is “absolutely conceivable that the euro will replace the dollar as (world) reserve currency, or will be traded as an equally important reserve currency.” The recent weakness of the US dollar might encourage various parties to increase their reserves in euro.
Someone who uses the “Mean Reversion” name would surely understand that the dollar can’t lose value against the Euro, gold, oil, etc., while at the same time we wouldn’t experience inflation at home. You should look up “purchasing power parity” as a basic concept.
In the short term, a $3 burger may still be $3 while the Euro, gold, etc. go up in value: But such divergence is unstainable, sooner or later that burger (and cars, clothes, etc.) will cost a lot more than $3. Unless we are drinking the Fed’s Kool Aid, we’ll see that they’re trying to fix the current credit crunch mess by inflating away the value of debts.
ParticipantWhy the Euro?
The peso is the currency of many countries, including the Philippines. You knew that, right? Which country were you referring to? I’m sure you also know what the euro is.
The European Union, whose currency is the euro, had a GDP of almost US$17 trillion in 2007, amounting to 31% of the world’s total. (The US GDP was only 14 trillion). The EU is the largest exporter of goods, the second largest importer, and the biggest trading partner to several countries such as the United States and China. 163 of the top 500 largest corporations measured by revenue (Fortune Global 500) have their headquarters in the EU.
Former Fed Chairman Alan Greenspan said in 2007 that it is “absolutely conceivable that the euro will replace the dollar as (world) reserve currency, or will be traded as an equally important reserve currency.” The recent weakness of the US dollar might encourage various parties to increase their reserves in euro.
Someone who uses the “Mean Reversion” name would surely understand that the dollar can’t lose value against the Euro, gold, oil, etc., while at the same time we wouldn’t experience inflation at home. You should look up “purchasing power parity” as a basic concept.
In the short term, a $3 burger may still be $3 while the Euro, gold, etc. go up in value: But such divergence is unstainable, sooner or later that burger (and cars, clothes, etc.) will cost a lot more than $3. Unless we are drinking the Fed’s Kool Aid, we’ll see that they’re trying to fix the current credit crunch mess by inflating away the value of debts.
ParticipantWhy the Euro?
The peso is the currency of many countries, including the Philippines. You knew that, right? Which country were you referring to? I’m sure you also know what the euro is.
The European Union, whose currency is the euro, had a GDP of almost US$17 trillion in 2007, amounting to 31% of the world’s total. (The US GDP was only 14 trillion). The EU is the largest exporter of goods, the second largest importer, and the biggest trading partner to several countries such as the United States and China. 163 of the top 500 largest corporations measured by revenue (Fortune Global 500) have their headquarters in the EU.
Former Fed Chairman Alan Greenspan said in 2007 that it is “absolutely conceivable that the euro will replace the dollar as (world) reserve currency, or will be traded as an equally important reserve currency.” The recent weakness of the US dollar might encourage various parties to increase their reserves in euro.
Someone who uses the “Mean Reversion” name would surely understand that the dollar can’t lose value against the Euro, gold, oil, etc., while at the same time we wouldn’t experience inflation at home. You should look up “purchasing power parity” as a basic concept.
In the short term, a $3 burger may still be $3 while the Euro, gold, etc. go up in value: But such divergence is unstainable, sooner or later that burger (and cars, clothes, etc.) will cost a lot more than $3. Unless we are drinking the Fed’s Kool Aid, we’ll see that they’re trying to fix the current credit crunch mess by inflating away the value of debts.
ParticipantWhy the Euro?
The peso is the currency of many countries, including the Philippines. You knew that, right? Which country were you referring to? I’m sure you also know what the euro is.
The European Union, whose currency is the euro, had a GDP of almost US$17 trillion in 2007, amounting to 31% of the world’s total. (The US GDP was only 14 trillion). The EU is the largest exporter of goods, the second largest importer, and the biggest trading partner to several countries such as the United States and China. 163 of the top 500 largest corporations measured by revenue (Fortune Global 500) have their headquarters in the EU.
Former Fed Chairman Alan Greenspan said in 2007 that it is “absolutely conceivable that the euro will replace the dollar as (world) reserve currency, or will be traded as an equally important reserve currency.” The recent weakness of the US dollar might encourage various parties to increase their reserves in euro.
Someone who uses the “Mean Reversion” name would surely understand that the dollar can’t lose value against the Euro, gold, oil, etc., while at the same time we wouldn’t experience inflation at home. You should look up “purchasing power parity” as a basic concept.
In the short term, a $3 burger may still be $3 while the Euro, gold, etc. go up in value: But such divergence is unstainable, sooner or later that burger (and cars, clothes, etc.) will cost a lot more than $3. Unless we are drinking the Fed’s Kool Aid, we’ll see that they’re trying to fix the current credit crunch mess by inflating away the value of debts.
ParticipantWhy the Euro?
The peso is the currency of many countries, including the Philippines. You knew that, right? Which country were you referring to? I’m sure you also know what the euro is.
The European Union, whose currency is the euro, had a GDP of almost US$17 trillion in 2007, amounting to 31% of the world’s total. (The US GDP was only 14 trillion). The EU is the largest exporter of goods, the second largest importer, and the biggest trading partner to several countries such as the United States and China. 163 of the top 500 largest corporations measured by revenue (Fortune Global 500) have their headquarters in the EU.
Former Fed Chairman Alan Greenspan said in 2007 that it is “absolutely conceivable that the euro will replace the dollar as (world) reserve currency, or will be traded as an equally important reserve currency.” The recent weakness of the US dollar might encourage various parties to increase their reserves in euro.
Someone who uses the “Mean Reversion” name would surely understand that the dollar can’t lose value against the Euro, gold, oil, etc., while at the same time we wouldn’t experience inflation at home. You should look up “purchasing power parity” as a basic concept.
In the short term, a $3 burger may still be $3 while the Euro, gold, etc. go up in value: But such divergence is unstainable, sooner or later that burger (and cars, clothes, etc.) will cost a lot more than $3. Unless we are drinking the Fed’s Kool Aid, we’ll see that they’re trying to fix the current credit crunch mess by inflating away the value of debts.
ParticipantKev,
I recommend you look up “monetary illusion” in any ECON 101 textbook before writing silly replies. The fact we get paid in debased dollars is part of the problem, as our standard of living will surely deteriorate.
We can’t create wealth out of thin air by increasing liquidity in the banking system. The fact that the dollar is worth less vis-a-vis gold and oil is an indication that everything else (food, clothing, consumer goods, land, etc.) will have substantial price increases in the near term. And not because these items will be worth more, but because the dollars we get paid with are worth less.
ParticipantKev,
I recommend you look up “monetary illusion” in any ECON 101 textbook before writing silly replies. The fact we get paid in debased dollars is part of the problem, as our standard of living will surely deteriorate.
We can’t create wealth out of thin air by increasing liquidity in the banking system. The fact that the dollar is worth less vis-a-vis gold and oil is an indication that everything else (food, clothing, consumer goods, land, etc.) will have substantial price increases in the near term. And not because these items will be worth more, but because the dollars we get paid with are worth less.
ParticipantKev,
I recommend you look up “monetary illusion” in any ECON 101 textbook before writing silly replies. The fact we get paid in debased dollars is part of the problem, as our standard of living will surely deteriorate.
We can’t create wealth out of thin air by increasing liquidity in the banking system. The fact that the dollar is worth less vis-a-vis gold and oil is an indication that everything else (food, clothing, consumer goods, land, etc.) will have substantial price increases in the near term. And not because these items will be worth more, but because the dollars we get paid with are worth less.
ParticipantKev,
I recommend you look up “monetary illusion” in any ECON 101 textbook before writing silly replies. The fact we get paid in debased dollars is part of the problem, as our standard of living will surely deteriorate.
We can’t create wealth out of thin air by increasing liquidity in the banking system. The fact that the dollar is worth less vis-a-vis gold and oil is an indication that everything else (food, clothing, consumer goods, land, etc.) will have substantial price increases in the near term. And not because these items will be worth more, but because the dollars we get paid with are worth less.
ParticipantKev,
I recommend you look up “monetary illusion” in any ECON 101 textbook before writing silly replies. The fact we get paid in debased dollars is part of the problem, as our standard of living will surely deteriorate.
We can’t create wealth out of thin air by increasing liquidity in the banking system. The fact that the dollar is worth less vis-a-vis gold and oil is an indication that everything else (food, clothing, consumer goods, land, etc.) will have substantial price increases in the near term. And not because these items will be worth more, but because the dollars we get paid with are worth less.
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