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Has inflation murdered the millionaire?
- Thread starter Bryn Solomon
- Start date
Quote from ByLoSellHi:
Under that scenario, I agree.
Few people own 10 homes in California, though.
They're typically stuck with whatever the market bears (and imposes) in their local market.
Plus, California isn't immune from rapid housing deflation. It happened in 1987, and it was pernicious, nasty, and destroyed 38% of housing values, lasing until 1994.
We can substitute south FL, Chicago, Boston, DC, Seattle, Denver, Las Vegas, Phoenix, etc. Come on, there are many pockets of high appreciation. Of course housing prices can go down! But that is irrelevant to the topic of this thread. To make that argument that people are not really rich, their assets are merely inflated, is quite simply a fallacious argument. The bottom line is, wealth in this country has been created through home ownership, real estate speculation, stock market prices at all time highs and retirement funds (IRA's, 401ks) being plush with cash and unemployment at decade lows.
Quote from Maverick74:
Bullshit. You can't tell me that a person whose home has gone up 400% in value is inflation. It's relative pricing. In other words, when Suzie Snowflake cashes out 400k in equity from the sale of her home, that is real money that has real purchasing power. Some of the appreciation in home values is because of inflation but a lot of it is supply and demand. There is no land in this country in urban areas and in nice neighborhoods. Let me put it another way, home prices in St.Louis, Kansas City, Oklahoma City, Des Moines, Omaha, etc, have seen no appreciation. Some have actually seen depreciation.
In reality most people cash out equity with a loan not by selling up. This is money mostly created by the lending bank out of thin air.
The house was probably bought with an mortgage in the first place as well, again money most created out of thin air.
Its a great big Ponzi scheme, as long as people can keep paying the interest on all this new credit it wont collapse.
Quote from Businessman:
In reality most people cash out equity with a loan not by selling up. This is money mostly created by the lending bank out of thin air.
The house was probably bought with an mortgage in the first place as well, again money most created out of thin air.
Its a great big Ponzi scheme, as long as people can keep paying the interest on all this new credit it wont collapse.
You sound like someone who missed the boat. If real estate speculation is a ponzi scheme then I guess so is the stock market.
"Sorry, go sell crazy somewhere else, we are all stocked up here."
Jack Nicholson
Its all about monetizing exisiting debt with even more debt. Our response to the nasdaq bubble was to double all existing mortgage debt in only a couple of years. Now its on to the corporate sector. We have to find new ways of producing debt to keep going.
Quote from JamesVU2000:
Its all about monetizing exisiting debt with even more debt. Our response to the nasdaq bubble was to double all existing mortgage debt in only a couple of years. Now its on to the corporate sector. We have to find new ways of producing debt to keep going.
Actually that is not what it is. I'll give you a hint. C.......D.......O.....'s
Elaborate please.
You can't even figure on retiring on a million anymore. My mom and dad saved all their lives to retire in 1996 with $1 million. How many million do I need? I bet I need $3 million.
If that's not proof of inflation, I don't know what is.
If that's not proof of inflation, I don't know what is.
Quote from JamesVU2000:
Elaborate please.
Collateral debt obligations (cdo's). What has completely changed our society today in the finance world is our ability to take debt off the hands of the banks into the hands of hedge funds and those that are seeking risk. It has opened up an arbitrage market we have never seen before. Our banking system has advanced to the point where we can allow risk takers to absorb risk and allow money to flow more freely and efficiently.
In other words, like I said earlier, you allow capital to flow towards it's highest return, in the most stable environment with the greatest amount of purchasing power. It's actually revolutionary. CDO's are the greatest financial invention in the last century.
There are some good 700 page books I could recommend to you on CDO's if you like.