[sdduuuude]

“Dollar value” and “dollar availability for housing purchases” are two completely different things. You are treating them as the same thing.

As an example, take the drop of the 10 year bond over the last few days. The money supply has not changed – the Fed neither changed the money supply, nor rates.

However, mortgage rates rose, making less money available for housing. Thus, even though currency was not artificially devalued, there is less of it available for housing.

Is the separation not clear?

[sdduuuude]

“Dollar value” and “dollar availability for housing purchases” are two completely different things. You are treating them as the same thing.

As an example, take the drop of the 10 year bond over the last few days. The money supply has not changed – the Fed neither changed the money supply, nor rates.

However, mortgage rates rose, making less money available for housing. Thus, even though currency was not artificially devalued, there is less of it available for housing.

Is the separation not clear?

[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.

[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.

[sdduuuude]

Exactly CONCHO.

[sdduuuude]

Exactly CONCHO.

[sdduuuude]

I understand, but to say that inflation has been the exclusive cause of housing price increases when rents have not moved is incorrect.

[sdduuuude]

I understand, but to say that inflation has been the exclusive cause of housing price increases when rents have not moved is incorrect.

[sdduuuude]

Am I to assume, then, that my dollar has gone up in value by 2% in the last year?

[sdduuuude]

Am I to assume, then, that my dollar has gone up in value by 2% in the last year?

[sdduuuude]

Why, then, have rents increased little-by-little while house prices have soared ?

Both are priced in dollars.
Both are tied to the value in use.

If the dollar devalued so significantly as to triple the price of my house in the last 8 years, then surely the price of rent should have tripled as well.

But they didn’t.

[sdduuuude]

Why, then, have rents increased little-by-little while house prices have soared ?

Both are priced in dollars.
Both are tied to the value in use.

If the dollar devalued so significantly as to triple the price of my house in the last 8 years, then surely the price of rent should have tripled as well.

But they didn’t.

[sdduuuude]

I don’t completely disagree with your comments on inflation and money supply, buy your basic economics needs some work.

I believe this is an incorrect statement:

“For any commodity … its real value (use value) is defined by its function”

This is not its “real value.” That is its “value in use”
Each individual has a different value in use for each commodity.

A commodity’s value in use is defined by its function, but its real value is the highest price someone is willing to pay at a given instant in time. Period.

I also disagree with this:
“From that time on, taking in to account depreciation, changes in location desirability (assuming constant use value and reasonably stable wages), the price of the property is completely a function of the value of the currency.”

It may also be a function of the availability of capital – related to, but not the same as “value of the currency.”

Also, we can see an example of how value in use is not the “real value”. A commodity may have a constant value in use, and currency may have the same value, but if nobody can borrow the money to buy it, the price they are willing to pay can go down. Thus, the value of the commodity goes down.

I think the housing increase has not been entirely a result of currency devaluation, but a mis-valuation of mortgage debt instruments by Wall Street that has let to rampant lending of money that should never have been lent.

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