Thought you'd all enjoy this. But the interesting
question is -- what's next?
Date: 22 Dec 2003 16:08:40 -0500
Message-ID: <bs7mgo$l9t$1@[EMAIL PROTECTED]
>
>> ...
> No, but the percentage of home owners in the U.S. goes up
> annually. 70% and climbing. This is a good thing.
That depends. I can envision various scenarios in
which home owner****p based on tem****arily cheap money
becomes highly disadvantageous when conditions change,
especially if they change very rapidly. For instance,
let us suppose there is substantial leakage from the
upper monetary pool into the lower one, causing a
sharp rise in the CPI, and let us suppose the
government (including the FRB) does not want to pay
the costs of inflation. Interest rates must be raised
sharply -- that is, the printing press must be turned
off. Now it will become impossible to sell a piece of
real estate at the inflated price which had been
created by cheap money, and those who borrowed on
adjustable rate plans will also find their mortgage
payments rising, perhaps to the point where they can't
pay them. In any case, some people always have to
sell and they will be selling into a very depressed
market so they will be selling cheap. After a few
months, real estate prices will generally collapse and
stay collapsed for quite a while, as such movements
have a way of creating their own momentum. ....
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