Prices, Inflation/Deflation, Interest Rates & The Fed

Blade Runner

Hummingbird
Orthodox
where they occur is outrageously important to pay attention to rather than calling everything inflation when it's not.

general accepted today by professionals that anyone who bought property in the past five years will be underwater in them shortly. I tried to warn people but oh well.

We always agreed with these points. What we had previously argued on was not this; we always saw deflation in certain things. It turns out that's mainly why the CPI is such a crock (the feds emphasize those things but they are fairly insignificant).
 

Blade Runner

Hummingbird
Orthodox
If you've read When Money Dies, by Adam Ferguson, this feels like about 1920 to me. Everything in the book feels like what is happening now.
Government spending was 700% of income in Weimar Republic just before the crack up boom.
US spending is now 300% of revenue.
This is important and also why when you consider what @EndlessGravity is saying, also go look up and see what happened in Weimar (check out @LukeGromen presentations). It turns out that Weimar had such crazy volatility that although in the end gold skyrocketed against the Mark, any shorter term trader got rekt multiple times by the reactions of the markets to the Reichsbank.

My current view is that the Fed will indeed allow the markets to get crushed, wait too late, and then reverse at the end of this year or in 2023 and then inflation of various things (equities, btc, etc) goes bonkers again.
 

xbt2

Pigeon
Protestant
Impossible to say given how screwed up the market has become. I go back and forth on how I think this will go (and it may be very dependent on area). I'm still trying to make up my mind and there's a lot of factors at play (govt intervention like 2020, shifting in the annual real estate cycle, etc).

Edit: for any younger men who have a family or thinking of starting one, I'd love to hear your thoughts on where you're at with views on housing. If there's one thing I could change about my life it's that I was filthy rich so I could help young Christian men get homes to build families.
I can't seem to get a good picture of the current situation either.
 

chance vought

Woodpecker
Protestant
Of note here is there were concerns of a deflationary shock (and this passage sounds eerily similar to a J Powell “softish landing.”

“With the Cannes conference over and the prospect of a new and harder French line on reparation payments, the mark started to drift downwards again, reaching 850 to the pound in the last week of January 1922. One whom Lord D’Abernon’s diary described baldly as ‘one of the most influential men in the country whose name must not be mentioned’ compared the country to an automobile which could not be stopped in five yards. Everyone recognised, he said, that the deflation period was going to be disagreeable, with men out of work and factories closed, and that there would have to be a limit fixed to printing notes. But, he added, ‘Do not pull us up too short. Give the car time to stop without skidding.”

Excerpt From
When Money Dies
Adam Fergusson

Of course the rise is unhealthy and feverish,’ wrote Lord D’Abernon.
We cannot be very far from a panic. As soon as inflation ceases to increase and deflation sets in, there will be the devil to pay. Behrenstrasse here, which corresponds to Lombard Street, reminds me of San Francisco after the Earthquake. Almost every bank is being increased or rebuilt, and one can hardly get along the roadway. Something like the South Sea Bubble.

It must have been very hard for the ordinary man with little knowledge of finance to determine whether the outlook was good or bad. The truth, no doubt, as the Ship of State steamed headlong downstream towards the cataract, was that it was good for some and bad for others. ”

Excerpt From
When Money Dies
Adam Fergusson
 
Last edited:

cosine

Woodpecker
I really don't know how to "call bottom" right now.

What I can come up with is:
1. Make sure I don't lose my job
2. Keep a larger cash allocation
3. Keep the amount of bitcoin, real estate, stocks, etc I have, but probably halt dollar-cost-averaging for now.

I also find this fact rather grounding:
Dead people's stock portfolios perform better than living people's.
This suggests that staying calm and not making drastic changes is the best solution.
 

Philip Dru

Sparrow
Trad Catholic
For real estate, I called it in December but it's general accepted today by professionals that anyone who bought property in the past five years will be underwater in them shortly. I tried to warn people but oh well.

.....

And remember who correctly predicted you were watching a giant pump and dump in action...on stocks, commodities, crypto, etc. Now we wait to see what's next and how bad this thing gets before we possibly get some level of stabilization.

I find your rationale intriguing. Wrong when it comes to housing, and here is why:

1) historically, when nations get into this position they debase the currency.

2) Big corporations have been buying real estate and not selling. This is not mostly individual speculators like it was in 2008, now it is corporations. They are still buying, even at recent outlandish 2020-2022 prices. Existing home inventory is half of what it was in 2005, without any tick upwards as there was in late 2005. The only way it makes sense is if the big corporations, who have insider knowledge, know to expect an inflationary melt-up.

3) Most common people are expecting a housing crash akin to what you say. I hear it all the time. The common people are usually wrong.

4) The supply chain issues are used to disguise the clear and documented reason for increased prices - the inflated money supply. Last year we rented to someone who had been previously homeless. He said he had social workers calling him up and asking him if he needed money, that they had millions they were trying to give away as fast as possible. This organization paid for his rent at our place. They are very clearly intentionally encouraging inflation. Supply chain issues are blamed to keep the average person from catching on for as long as possible. The big players lose the edge once the average man anticipates inflation.

5) Lastly, a return to 2008 prices would mean that housing is affordable again, even at high interest rates. This is not what they want. It is the crash that is the fake-out. Designed to encourage people to sell. Anyone who sells right now will be left holding rapidly devaluing cash.

This is indeed a pump and dump, but it is geared towards a melt-up, not a melt-down. Those who sell now from fear and take refuge in cash are the losers.
 

Max Roscoe

Ostrich
Orthodox Inquirer
Do you think real estate prices will tank to 2008/2009 levels or possibly lower?
Always ask Qui Bono? Who benefits?

The cost of houses is absolutely ridiculous right now, directly caused by absurdly low interest rates, below what any willing lender would loan funds to a willing borrower for.

But if housing prices declined significantly, it would mean millions of people could face bankruptcy. They want these people to make their monthly payments on the overpriced $500,000 mortgage loan over the next 30 years so they can collect the million dollars in interest that comes with it.

However, the cost of a starter home in my area has gone from $100,000 to $250,000 ,and that simply isn't sustainable. College graduates cannot pay a quarter of a million dollars for a house. So I think prices will have to become more reasonable.

TLDR; a mild decline, or simply hold prices flat for a few years, which is the same thing as a decline, since the dollar devalues almost 10% a year.

On the other hand, never forget their goal: You will own nothing and you will be happy. Personally, I don't think they plan to eliminate homeownership, just phase it out. I think anyone born today will never own a house.
 

MartyMcFly

Ostrich
Other Christian
Always ask Qui Bono? Who benefits?

The cost of houses is absolutely ridiculous right now, directly caused by absurdly low interest rates, below what any willing lender would loan funds to a willing borrower for.

But if housing prices declined significantly, it would mean millions of people could face bankruptcy. They want these people to make their monthly payments on the overpriced $500,000 mortgage loan over the next 30 years so they can collect the million dollars in interest that comes with it.

However, the cost of a starter home in my area has gone from $100,000 to $250,000 ,and that simply isn't sustainable. College graduates cannot pay a quarter of a million dollars for a house. So I think prices will have to become more reasonable.

TLDR; a mild decline, or simply hold prices flat for a few years, which is the same thing as a decline, since the dollar devalues almost 10% a year.

On the other hand, never forget their goal: You will own nothing and you will be happy. Personally, I don't think they plan to eliminate homeownership, just phase it out. I think anyone born today will never own a house.
Joint ownership will be common. Three people will jointly buy a 3-bedroom home and share. This is already happening and it is marketed as 'communal living' and a chance to have lifelong friends as well as a way to save money.
 

Philip Dru

Sparrow
Trad Catholic
Joint ownership will be common. Three people will jointly buy a 3-bedroom home and share. This is already happening and it is marketed as 'communal living' and a chance to have lifelong friends as well as a way to save money.
I saw an article on this but didn't put 2&2 together: It would be nearly impossible to have more than one child in such a joint ownership situation. Good call out.

If we have any trust attorneys on the forum who can advise us on the nuances of placing houses into trusts for the next generation this might be quite useful information.
 

chance vought

Woodpecker
Protestant
If the state wants your property, it will get it…no amount of legal protection will save it. Even first world nations don’t even bother with the theater of passing laws anymore, much less limiting their powers to those enumerated in constitutions. Most control and confiscation can be done via un-elected bureaucrats their regulations. It has happened over and over in history, every economic reset - those in power will sacrifice their subjects to try and stay in power.

imminent domain, civil asset forfeiture, red flag laws…I think the best strategy is to own as little as possible, especially juicy targets like real estate, bank balances, and stocks (which you cannot take physical custody of in the USA…always counterparty risk)

I hope I am wrong, but I have not seen any deviation from the path we are on.
 
Last edited:

xbt2

Pigeon
Protestant
I really don't know how to "call bottom" right now.

What I can come up with is:
1. Make sure I don't lose my job
2. Keep a larger cash allocation
3. Keep the amount of bitcoin, real estate, stocks, etc I have, but probably halt dollar-cost-averaging for now.

I also find this fact rather grounding:

This suggests that staying calm and not making drastic changes is the best solution.
This is basically the path I'm currently on. One difference, I have land that I intend to build on and have been waiting for a bit of a downturn to get started. Not looking for a market crash but labor and materials are too expensive at the moment and I need prices to ease some, then I could could complete most of my build with cash.
 

cosine

Woodpecker
This is basically the path I'm currently on. One difference, I have land that I intend to build on and have been waiting for a bit of a downturn to get started. Not looking for a market crash but labor and materials are too expensive at the moment and I need prices to ease some, then I could could complete most of my build with cash.
Very cool.
Do you have permits and etc approved yet?

If you can build either your homestead or a house that people want to actually buy, that's amazing, just a huge project, and requires quite the time horizon.
 

Cynllo

Kingfisher
Other Christian
Those predicting we are living in the era of small currencies dying were right.

inflation-from-2020.jpg

media%2FFWHju8XXoAEUd1A.jpg%3Fname%3Dorig
 

antonius_03

Chicken
Orthodox
Impossible to say given how screwed up the market has become. I go back and forth on how I think this will go (and it may be very dependent on area). I'm still trying to make up my mind and there's a lot of factors at play (govt intervention like 2020, shifting in the annual real estate cycle, etc).

Edit: for any younger men who have a family or thinking of starting one, I'd love to hear your thoughts on where you're at with views on housing. If there's one thing I could change about my life it's that I was filthy rich so I could help young Christian men get homes to build families.
As a young man, I don't think that owning real estate in the US will be a good idea forward. Instead, I'm looking to invest or build a property in Latam as my purchasing power is still high there and I work remotely (along with later potentially buying land which produces some-sort of good/raw material). If it's God's will, I will start a family there after fulfilling this ambition.
 
If real estate prices are coming down, it's not where I see it (currently in the Southern US). House prices still going up in my city, and rent prices also going up. My brother lives in Florida and his rent just went up FIFTEEN percent.

My buddy lives in NYC, his black family owned brownstown building in Harlem (very nice building and area, no joke) is up for sale and he anticipates his rent will go up 30% when the new owners take over. He's lived there for 7 years. I'll bet money it's gonna be private equity that buys it.

Anyway. Unless there is actual deflation in real estate, rent, food or energy, it literally won't matter what anything else costs anyway.
 

paternos

Woodpecker
Catholic
If real estate prices are coming down, it's not where I see it (currently in the Southern US). House prices still going up in my city, and rent prices also going up. My brother lives in Florida and his rent just went up FIFTEEN percent.

My buddy lives in NYC, his black family owned brownstown building in Harlem (very nice building and area, no joke) is up for sale and he anticipates his rent will go up 30% when the new owners take over. He's lived there for 7 years. I'll bet money it's gonna be private equity that buys it.

Anyway. Unless there is actual deflation in real estate, rent, food or energy, it literally won't matter what anything else costs anyway.
Supply and Demand.

The stealing "elites" pay themselves well, inflation theft from the working class.

Gentrifying means more bourgeoisie in and plebs out. More parasites in, more builders out.

When prices go up in New York, means demand is high by parasites.

Thing is workers dies first, then the parasite, if he can't find a another host. But as it seems there is a still a lot of blood to suck for the parasite in new york.
 

Thomas More

Crow
Protestant
Those predicting we are living in the era of small currencies dying were right.

View attachment 43795

media%2FFWHju8XXoAEUd1A.jpg%3Fname%3Dorig
Wow! That Iranian Rial is real crazy. It would be over one million Rials for a cup of coffee! A billion Rials for a cheap used car (US$3000). A moderately rich person would be a trillionaire, and really rich people could be 10 or 100 trillionaires

With a little more of this kind of inflation, they could start having quadrillionaires! I wonder if they have coins for 100,000 or 1,000,000 Rials? I suppose the Venezuelan Bolivar is worse, but lots of people already knows they've had hyper inflation. I didn't know Iran's money was that bad off.
 
Last edited:

chance vought

Woodpecker
Protestant
Wow! That Iranian Rial is real crazy. It would be over one million Rials for a cup of coffee! A billion Rials for a cheap used car (US$3000). A moderately rich person would be a trillionaire, and really rich people could be 10 or 100 trillionaires

With a little more of this kind of inflation, they could start having quadrillionaires! I wonder if they have coins for 100,000 or 1,000,000 Rials? I suppose the Venezuelan Bolivar is worse, but lots of people already knows they've had hyper inflation. I didn't know Iran's money was that bad off.
Zimbabwe 100 Trillion Dollars, 2008, P-91, UNC, Replacement~2.jpg
 
Top