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Old 06-23-2018, 08:50 AM
 
731 posts, read 399,195 times
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Quote:
Originally Posted by mathjak107 View Post
it is not until rates get way high that there is a link to home prices . home prices are and always will be linked more to local; markets , supply and the general economic health of the economy . there is no disputing this .
Chart that I attached clearly shows abnormality that started in 2001. When you have abnormal and overinflated housing prices like we have today 1% higher interest rates from today's 4.70% are enough to slow down and end this insanity. 5.70% interest rates would do a serious damage to current inflated housing prices.
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Old 06-23-2018, 07:15 PM
 
Location: Silicon Valley
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Quote:
Originally Posted by mathjak107 View Post
once you subtract out the low savings rate and consumer debt from gdp , we really do not have a whole lot of gdp growth potential .

we may be looking at 1.50% when all is said and done. that really makes a case for interest rates on bonds already being to high .

many like kessler are forecasting a pretty big drop in bond rates on the near horizon as rates should not even be at this level .

trillions of dollars later and all the qe's and this is the best we can do and even inflation is rather tame from all that .

so don't be surprised if the 30 year bond ends up soaring .and yields fall as much as 30% again .
I thought this was rather insightful.
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Old 06-24-2018, 07:22 AM
 
64,577 posts, read 66,129,695 times
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Quote:
Originally Posted by C2BP View Post
Chart that I attached clearly shows abnormality that started in 2001. When you have abnormal and overinflated housing prices like we have today 1% higher interest rates from today's 4.70% are enough to slow down and end this insanity. 5.70% interest rates would do a serious damage to current inflated housing prices.
and i say as a general statement about rates vs home prices- baloney. i was thrilled to get a mortgage at 8% in 1987 and real estate was booming here . in fact when rates were even higher in the early 1980's i bought a co-op for 27k and 5 years later sold it for 100k
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Old 06-30-2018, 12:35 PM
 
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I mostly agree with the OP, but would like to point out a couple of things. This is not something that started in 2001, it started in the 70s. What happened in 2001 was military enforcing the rest of the world to continues to use the dollars. Until then the whole world happily increased their dollar holding. The more wars the more countries are forced to use dollars that they don't really want any more.

This leads me to the second point. Though rising interest will help the dollar domestically is beyond the point. The debt is so big that the u.s. will collapse without so many countries using dollars, all countries moving away from the dollar get war, sanctions or economic sabotages, etc.

Back to what I was saying, this has been going on for a long time then accelerated in the 70s. Economic "growth" has nothing to do with real economy=good+services. It is all about speculation, rent seeking, compound interest, borrowing millions of dollars to buy business and soon resell it for huge profits.
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Old 07-15-2018, 12:07 AM
 
731 posts, read 399,195 times
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Quote:
Originally Posted by thelogo View Post
I mostly agree with the OP, but would like to point out a couple of things. This is not something that started in 2001, it started in the 70s. What happened in 2001 was military enforcing the rest of the world to continues to use the dollars. Until then the whole world happily increased their dollar holding. The more wars the more countries are forced to use dollars that they don't really want any more.

This leads me to the second point. Though rising interest will help the dollar domestically is beyond the point. The debt is so big that the u.s. will collapse without so many countries using dollars, all countries moving away from the dollar get war, sanctions or economic sabotages, etc.

Back to what I was saying, this has been going on for a long time then accelerated in the 70s. Economic "growth" has nothing to do with real economy=good+services. It is all about speculation, rent seeking, compound interest, borrowing millions of dollars to buy business and soon resell it for huge profits.
Thelogo;

US Economy, World Economy or Globalism peaked in 2001. To use the metaphor of a fruit tree, the fruit ripened in 2001. It was time for harvest. How do we "harvest" an economy???? We do what the farmer does, we collect our fruit from the tree and begin preparing for winter, for recession, for night. Remember this succinct truth: FOR EVERY ACTION THERE IS AN EQUAL AND OPPOSITE REACTION. Here is an economic truth: FOR EVERY INFLATION THERE IS AN EQUAL AND OPPOSITE DEFLATION.

The fruit, the economy, inflates - fill with water, with debt, with money. But you can't grow that same fruit perpetually. There is a cycle involved. In 2001, we SHOULD have begun, slowly, to make money MORE expensive, not less expensive. The expansion (1983-2001) was over. GLOBALISM - a nice word for expanding one's influence all over the globe, like capitalism, colonialism, global trade - was ending, periodically speaking. The fruit has ripened and been sold and eaten and dried. Only our leaders are urban and don't believe in Nature's Laws so, instead of making money MORE expensive, they continued to fertilize the ripe fruit in the tree, pretending they could have perpetual growth. So, instead of raising interest rates, which would have begun to transition the world from the SPENDING CYCLE to the SAVING CYCLE, they lowered rates to almost nothing in an attempt to extend the SPENDING CYCLE indefinitely.

Those with no religion have no problem in breaking the laws of nature. They don't realize that the laws of nature benefit humanity even if the benefits are not always readily perceptible. Interest rates, when raise, choke off GROWTH. But in 2001, GROWTH had ended. You can't cause more Growth when the Growth season is over. It's like trying to cause extra summer time through some bookkeeping trick. We NEED deflation, because deflation is what gets the rotten fruit in the tree, in which are stored, the seeds of the next crop, back down to earth where they must be buried.

So the FED is fertilizing dead fruit in the tree by feeding them more fertilizer in the form of cheaper and cheaper money. Of course, this is destroying the US dollar. Again, we should have begun raising interest rates in 2001. We did the opposite. Now we can't have real economic growth for the rest of our existence unless we allow deflation and depression to do it's job, unless we allow massive bankruptcies and defaults, unless we let this fake and phony economy created by debt spending implode. We only managed to grow our debt since 2001, especially since 2008. Growing debt is not the same as growing the economy!!!

Let's face it....you all have been fooled by the Fed. Your kids and grandkids will be paying for this debt orgy and insanity.
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Old 07-15-2018, 01:58 AM
 
64,577 posts, read 66,129,695 times
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and life as we know it will likely go on for their kids and grand kids . just as we were told life and america are ending when we entered the work force more than 40 years ago . weekly i would get the gold bug newsletters of pending doom , the same story line still repeats today ..and in the end likely will in keep repeating in perpetuity ......
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Old 07-15-2018, 08:01 AM
 
5,155 posts, read 2,346,169 times
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Excellent post op.
Everything is artificially inflated.
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Old 07-15-2018, 08:08 AM
 
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Quote:
Originally Posted by dysgenic View Post
I reject this common argument. Small houses and even townhouses and condos have become borderline unaffordable in many parts of the country. The house i grew up in, a small 3 br ranch, was purchased for 10k by my Dad in the early 70s. Todays price? Close to 1 million dollars (nice neighborhood, good schools).
Also, a lot of the old homes in this country were built to last with brick and strong foundations.
Compare that today with cheap chinese drywall and pressboard.
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Old 07-15-2018, 08:14 AM
 
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Quote:
Originally Posted by Mircea View Post
That's only in a very few places in the country, less than 10%.

I also grew up in a 3-bedroom ranch, which my family purchased for $15,000 in 1965. It sold in 2005 for $120,000, even though it's only appraised at $98,600.

The average home price in this Metropolitan Statistical Area is only $129,000.

One over-looked reason for high home prices is the fact that the minimum square-footage is now more than 3 times greater than in the past at 4,000+ sq ft versus 1,250 sq ft.

That amount of space is exorbitant and unnecessary, and results in higher prices, since construction costs are higher.
This is not the fault of consumers.
The demand is there for cheaper and smaller houses but builders would rather take on more profitable projects with bigger houses for the wealthy.
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Old 07-15-2018, 08:22 AM
 
5,155 posts, read 2,346,169 times
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Quote:
Originally Posted by thelogo View Post

Back to what I was saying, this has been going on for a long time then accelerated in the 70s. Economic "growth" has nothing to do with real economy=good+services. It is all about speculation, rent seeking, compound interest, borrowing millions of dollars to buy business and soon resell it for huge profits.
Excellent Post.
The top wealthy in this country are where they are at because of rent seeking rather selling goods and services via innovation and capitalism.
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