Prices, Inflation/Deflation, Interest Rates & The Fed

budoslavic

Owl
Gold Member
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NoMoreTO

Ostrich
Good article from Zero Hedge.

Inflation Is Sticky


Consider the dynamic of Fed-inflated bubbles raising rents. The house that once sold for $200,000 is sold to a pool of investors for $800,000, and the property taxes, insurance and debt service rise accordingly: even though the house didn't change, thanks to the Fed's bubble, the entire cost structure is higher.

So what happens next? The investors jack the rent up to cover the higher costs. As for refinancing to lower the monthly mortgage payment--that trend has reached the end of the line. As inflation gathers steam, mortgage rates can only go up, not down.



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Max Roscoe

Kingfisher
One option is to refinance them to pull the money out when the time comes and just have a property management company manage them. This would defer any capital gains. Ultimately if you can refinance 50-75% of the equity, then perhaps no need to sell.

I spoke with a pricey accountant who does tax strategy recently, and it was well worth it. I'm in Canada though so lots more tax to hide from here.
I make about 20x (yes, TIMES) as much money on my rental property as I did when a property manager was managing it. Also: Property managers report all cash income to the government.

I also saw plenty of people go bankrupt around 2007. The ones who did were the ones who had tons of debt. Beware of borrowing money when you do not need to, or out of greed for how much you could make reinvesting the profits.
 

NoMoreTO

Ostrich
I make about 20x (yes, TIMES) as much money on my rental property as I did when a property manager was managing it. Also: Property managers report all cash income to the government.

I also saw plenty of people go bankrupt around 2007. The ones who did were the ones who had tons of debt. Beware of borrowing money when you do not need to, or out of greed for how much you could make reinvesting the profits.

Yeah I used a property manager to find tenants one year when I was in Colombia. Bunch of duds.

I agree with you on unnecessary loans, but unnecessary taxes are pretty bad too.
 
I make about 20x (yes, TIMES) as much money on my rental property as I did when a property manager was managing it. Also: Property managers report all cash income to the government.

I also saw plenty of people go bankrupt around 2007. The ones who did were the ones who had tons of debt. Beware of borrowing money when you do not need to, or out of greed for how much you could make reinvesting the profits.

To add to this: I also saw several millionaires I'm friends with lose everything during the same time. They went from living big to living in trailer parks. After ten years they still hadn't built back (and some are getting wiped out again today).
 

cosine

Sparrow
32% of all dollars ever printed have been printed since March 2020.

I'm up plenty in terms of raw $, but not 32% since then. I even managed about a 30% raise, which would be fantastic if the currency wasn't being wrecked.

I finally have a salary that's high enough that I can consistently add material investments; unfortunately it seems like the walls could be closing in rather quickly on salaried people without major assets, real estate empires, etc.

There are ~47 million millionaires in the world, but only 21 million BTC total. It does seem like quite the plausible solution, even if you only have a fraction one. I am buying assets as quickly as I possibly can before the USD erodes further.
 

Monty_Brogan

Woodpecker
Gold Member
32% of all dollars ever printed have been printed since March 2020.

I'm up plenty in terms of raw $, but not 32% since then. I even managed about a 30% raise, which would be fantastic if the currency wasn't being wrecked.

I finally have a salary that's high enough that I can consistently add material investments; unfortunately it seems like the walls could be closing in rather quickly on salaried people without major assets, real estate empires, etc.

There are ~47 million millionaires in the world, but only 21 million BTC total. It does seem like quite the plausible solution, even if you only have a fraction one. I am buying assets as quickly as I possibly can before the USD erodes further.

Assets such as…?
 

cosine

Sparrow
Assets such as…?
cryptocurrencies, tech stocks, real estate in desirable locations with the intention of renting out. I think countries like Switzerland or Singapore would be ideal but I don't have that capacity yet.

Companies like UI Path are beginning to automate white collar jobs now, I believe those will be automated much more quickly than blue collar ones. Getting a robot to actually weld a pipe or lay a brick nicely is difficult, but repetitive form-filling tasks, customer service, etc is quickly automated.

I don't know if UI Path will "win" or if Google or Amazon for example will begin selling automation products at a large scale. Or, individual industries will automate their needs away, for example Lemonade is insurance all done with chat bots and very few humans.
 
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