Quote from Smart Money:
Oh for Pete's sake...why is everyone so scared of real estate? Hold on to your real estate. Buy all you can at fixed rates. A fixed rate note is a promise to pay the bank back X number of dollars over time in exchange for the use of a property now. For me, I have rental houses on fixed notes. I would LOVE LOVE LOVE it if the value of the dollar was cut in half overnight! Rents would shoot up, and I'd be paying the banks back with currency now worth half its value. If the value of currency falls to 10% of its current value, I could take a months wages and pay one of those properties off, and yet I'd still get a nice rent from it.
To prepare for inflation, buy things of value. I think I read an excerpt from a letter written by a businessman in ancient Rome to his servants telling them to buy ANYTHING of value.
I do think that speeding up the printing press is the only way out of our fiscal mess. Gotta cover the cost of medicare for all those retirees? Speed up the press. Gotta pay for a foriegn war? Speed up the press faster! If you buy a bond, the government guarantees you that you'll get your 5% or whatever on the purchase price. But they don't guarantee that the value of currency might be worth only a small fraction of what it was worth when you purchased the bond in the first place.
Inflation is coming, and one could argue that it is already here, but it is being masked by crappier and crappier goods and bond purchases from the Chinese. But the rising cost of building products, oil, gold, etc., is all due to our fiscal irresponsibility. Housing prices are up, and may even stay up, not because they INITIALLY warranted the lofty prices they bring now, but because the dollar's value dropped out from under it. In my estimation, in my neck of the woods, the value of houses doubled since about 1997. I don't have a chart, but I'm willing to bet gold did the same thing, implying that the dollar is worth roughly half of what it was then. If true, the value of the house may be justified because it is an asset that has a relatively static value (in gold).
One more thought before I go. When the Baby Boomers begin to retire, they will consume less, stop buying stocks, and start selling stocks. All of these are bad for the stock market. You can make money trading in any market. But unless you get some kind of matching in your retirement account, you're fooling yourself if you assume any type of growth for the next couple of decades. Have to wonder if its not already happening in anticipation...
SM
