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Old 08-01-2012, 02:21 PM
 
19,337 posts, read 16,935,945 times
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Quote:
Originally Posted by user_id View Post
QE will not bloat rents, rents are determined by supply and demand and there is no shortage of capital to build new structures. If anything QE should lower rents as it lowers the borrowing costs to build new structures....
Then you will have to explain how borrowing more money to buy land that cannot be expanded is going to add to supply in tight urban areas. Obviously some places can add condo space, but the ground beneath cannot be increased. San Francisco is the classic case. Not only is land restricted, but they is a limit on how far they can go up. If more labor cannot expand supply, it can only drive up costs, aka the free lunch for the land lord and the financier.

So long as they do this, as much money will be taken from the goods and services economy as it will add. That is why, again, QE2 did not do what QE1 did. QE 1 allowed those with equity the liquidly they desired. Those same people can now stand pat while everyone else sits in negative equity and cannot borrow at any interest rate.


Quote:
Also, though residential rents have been increasing lately, largely due to years of little to no building, commercial rents are still depressed. When I renewed my commercial leases ~6 months ago I was able to negotiate a number of improves into the lease (effectively lowering my rent by ~5%) and zero increase in rent for 2 years. There is still a large oversupply of commercial property throughout the country......but residential is finally starting to normalize which will spur increased building in response to higher rents.
They are depressed because of wages. When wages rise so will rents because it will be bidder against bidder and then the speculators will be able to borrow more money to buy property until once again wages reach subsistence.

Even more fun to consider that property values are relative to interest rates. That makes these investments more like a bond, with no place to go but down. So what ever it is will be a short ride since the ceiling on speculative values will be low until we see wage inflation. If we don't then we can expect to sink further into the output gap trap as we are.



Quote:
So, like I said, QE was never intended to return the US economy to full employment....or anything of that nature. Instead QE is being used to reduce interest rates across the board, and it has been effective in that regard. Thus, the idea that QE1 or QE2 have been failures is highly mistaken, they achieved their goal...
I disagree. After all I think Monetarism and their theories are good for yucks. All they did was add support for asset values to wring out the sponge to add secure loan carrying capacity to restart the credit system. It cannot be done forever. Soon they will fill the bucket too.

The cure in this system is when the ground becomes worthless again. Look for things like urban renewal in Detroit.
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Old 08-01-2012, 03:13 PM
 
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Quote:
Originally Posted by gwynedd1 View Post
Just because you don't understand how it works does not mean other people don't.
I'm sure you think you do, but there are plenty of self-proclaimed experts just like you who have had the same attitude as you and have been proven way off the mark, so you'll pardon if I dismiss message board economist guy who thinks they know exactly what something as complex as the global economy would have done without QE. You have no idea.
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Old 08-01-2012, 04:18 PM
 
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Originally Posted by slackjaw View Post
I'm sure you think you do, but there are plenty of self-proclaimed experts just like you who have had the same attitude as you and have been proven way off the mark, so you'll pardon if I dismiss message board economist guy who thinks they know exactly what something as complex as the global economy would have done without QE. You have no idea.
Where was I way off the mark or more accurately to say my sources back in the 19th century?

When resources not created by labor are speculatively held to higher prices than can be supported by their use, the economy will shed labor. A 1000 coconut rent on a 900 coconut producing island must remain idle.

Again, just because you don't understand it does not mean the unwashed stink rubs off on those around you.


Progress and Poverty, Chapter 22
Therefore, the problem must be speculation in things that are not the product of labor. Yet it must be things needed for production. And finally, it must be things of fixed quantity.
The cause of recurring recessions must be speculation in land.
I would add other forms of artificial scarcity giving rise to other rents.

We had land speculation driven by easy credit(as seen be rent and wage ratios), it went bust, and now we have a recession, again, just like back in the 19th century plus several other places in between.

I don't know when exactly or if da guberment will intervene(like they did) but you can't hold real estate off the market hoping for more speculative value at the end of a ponzi scheme and not spill over into the goods and services economy. You can eat into a workers surplus but not into his subsistence. Once the subsistence barrier is breeched, capital can no longer afford to keep him employed. You act as though we don't know a ponzi scheme will end. It will end. Many people knew it would end. We saw the same ending in Japan's real estate bust and we told them then in the 80s not to do what we are doing now -That is to continue to prevent real estate from falling to the price where the market may afford to allow labor to subsist and then to make a profit- Can't use the island until rent drops to 899 coconuts on a 900 coconut island and that includes money rents in the form of mortgages.
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Old 08-01-2012, 08:02 PM
 
8,265 posts, read 11,196,577 times
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Quote:
Originally Posted by gwynedd1 View Post
Where was I way off the mark
Who cares, we can never know whether you are right about the effects if QE hadn't happened because it didn't happen and the global economy is extremely complex.

Sorry, I'm sure you think you have it all figured out but after seeing posters who provide just as many compelling arguments as you and held same dismissive "just because you don't understand" tone explain in great detail why we'd have hyperinflation by now, or $500/barrel oil by now, or Dow 5k by now, or gold crash by now, or dollar collapse by now, etc. I've concluded that those spending the most time implying expertise are usually anything but. I don't believe for one second you can accurately predict that which economists and financial pundits cannot agree on.
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Old 08-01-2012, 09:13 PM
 
Location: Conejo Valley, CA
12,470 posts, read 18,192,512 times
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Quote:
Originally Posted by gwynedd1 View Post
Then you will have to explain how borrowing more money to buy land that cannot be expanded is going to add to supply in tight urban areas.Obviously some places can add condo space, but the ground beneath cannot be increased. San Francisco is the classic case. Not only is land restricted, but they is a limit on how far they can go up.
Why would I have to explain that? The United States has plenty of land, in fact the vast majority of land is empty. Cities, even if they lack empty land, aren't isolated identities. The costs of land in San Francisco is effected by the costs of land in say....Austin Texas. People can, in principle, move from San Francisco to Austin and they will do so as soon as they can't productively use the land. But guess what happens then? Land values in San Francisco fall to the level where production supports the land values....

Its cute that you're now quoting Henry George though, you realize that he advocates for the government ownership of all land though right? Though, given the current system, he purposed a compromise where you heavily tax land effectively making it leased despite "owned" legally. But to quote him, as if his theory is universally agreed on, is silly......

It is amusing to see people, as yourself, think they can predict the behavior of a non-linear system like the economy. Can you tell me about the weather in August 2020 in Los Angeles as well? What you are claiming to do is, mathematically, just as absurd as claiming to know about the weather in August 2020 in Los Angeles.
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Old 08-01-2012, 11:57 PM
 
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Quote:
Originally Posted by user_id View Post
Why would I have to explain that? The United States has plenty of land, in fact the vast majority of land is empty.
I don't even know what to say to something so ridiculous. Have you any idea what the power of a localized monopoly of well placed land in say NYC which is why a house with the same material costs in Manhattan will have far more value than one in the Nevada desert? Why are you even wasting my time when location location, location is the cry of the real estate investor?

Quote:
Cities, even if they lack empty land, aren't isolated identities. The costs of land in San Francisco is effected by the costs of land in say....Austin Texas. People can, in principle, move from San Francisco to Austin and they will do so as soon as they can't productively use the land. But guess what happens then? Land values in San Francisco fall to the level where production supports the land values....
Like an ideal bay and port in Austin? Singapore can be singularly noted to be one of the few places in the world to have a perfect deep water port exactly where it is. Land is not , just as the market reflects, so easily malleable. Even localized markets have city centers vs the fringes which affect their values. According to Ricardo, the discoverer of land rents, noted that a plot produces marginally better is a free ride.

Quote:
Its cute that you're now quoting Henry George though, you realize that he advocates for the government ownership of all land though right?
Wrong again. No, he was for private ownership of land but that it was to have its benefits redistributed by being the source of tax revenue, seeing as not one created it. What is really cute is how wealth through labor is redistributed, yet the likes of you don't consider that having your own skin owned by da guberment. I'd like to know why piano lessons in one's own home is taxable while sitting like a lump is not. Where is the use of more of the resources of the state? I'll tell you why that is. Its because piano lessons is an income and a means to pay. So you believe from each according to his means and to each according to his need, comrade.

Quote:
Though, given the current system, he purposed a compromise where you heavily tax land effectively making it leased despite "owned" legally. But to quote him, as if his theory is universally agreed on, is silly......
And what pray tell what is universally agreed in economics? Talk about a silly statement. Nevertheless I accept it as an observable fact that scarcity in anything creates rents. So then I suppose you also reject Ricardian economics as well since rent is his theory.

Quote:
It is amusing to see people, as yourself, think they can predict the behavior of a non-linear system like the economy. Can you tell me about the weather in August 2020 in Los Angeles as well? What you are claiming to do is, mathematically, just as absurd as claiming to know about the weather in August 2020 in Los Angeles.
Straw man since I made no such claim. The simple claim I made is akin to people having a demand for food during a siege. Lots of factors like how much they store and how many people will affect when they will have demand for relief. However its virtually a fact that they will need a source of food. I am embarrassed for you.


There were lots of people who were not surprised in 2008. Lots of people knew it was a bubble. Most of those that did not benefited from the illusion. Why so many of you act like no one could predict such a thing ? No one could predict the year but it was inevitable. We have seen this repeatedly.
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Old 08-02-2012, 12:11 AM
 
Location: Conejo Valley, CA
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Quote:
Originally Posted by gwynedd1 View Post
Have you any idea what the power of a localized monopoly of well placed land in say NYC which is why a house with the same material costs in Manhattan will have far more value than one in the Nevada desert?
Yep....and you are naturally ignoring the point, real estate values in cities are effected by real estate values outside of the city.


Quote:
Originally Posted by gwynedd1 View Post
Wrong again. No, he was for private ownership of land but that it was to have its benefits redistributed by being the source of tax revenue, seeing as not one created it.
Nope......try actually reading the book. He prefers government ownership of land, but advocated for using taxation to create de facto government ownership due to existing laws. He was being realistic.....

But I'm happy to see you're referring to higher quality authors, seeing you parrot that silly Jekyll Island book for months was getting old. So now you're stuck on George.... I hope Marx is next....Marx was more clever.

Quote:
Originally Posted by gwynedd1 View Post
And what pray tell what is universally agreed in economics? T
There is none, which is why its absurd to quote one author to support yourself. But its even more absurd given that he is a fringe economist, the vast majority think he is wrong.


Quote:
Originally Posted by gwynedd1 View Post
Why so many of you act like no one could predict such a thing ? No one could predict the year but it was inevitable. We have seen this repeatedly.
Its called having an understanding of mathematics.... Due entirely to randomness, you're going to have people that "predicted" events accurately and people that "predicted" events inaccurately. You are going to also have, again entirely due to randomness, people that "predict" events accurately more than once....and these people become fooled by randomness and believe themselves to be a sort of oracle. So you're just misunderstand what people are saying, nobody is saying that nobody predicted such a thing, instead they are claiming that there is no way to forecast economic events with any sort of certitude. Get the difference?

There is no way to predict an economy with any sort of accuracy. You can speculate, but you can't forecast with any sort of reasonable certitude. Those, as yourself, that claim to know how a non-linear system with thousands of variables would behave if you manipulated one variable.....are deluding themselves.
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Old 08-02-2012, 12:17 AM
 
19,337 posts, read 16,935,945 times
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Quote:
Originally Posted by slackjaw View Post
Who cares, we can never know whether you are right about the effects if QE hadn't happened because it didn't happen and the global economy is extremely complex.

Sorry, I'm sure you think you have it all figured out but after seeing posters who provide just as many compelling arguments as you and held same dismissive "just because you don't understand" tone explain in great detail why we'd have hyperinflation by now, or $500/barrel oil by now, or Dow 5k by now, or gold crash by now, or dollar collapse by now, etc. I've concluded that those spending the most time implying expertise are usually anything but. I don't believe for one second you can accurately predict that which economists and financial pundits cannot agree on.
Great but the only things I predicted actually came true while I never said anything about oil, gold or hyper inflation. Its not too hard to see what the banking system is doing on a quarterly basis. I don't know how much oil is in the ground so I don't make $500 predictions. I did note that the collapse of the Euro was extremely biased to the rise of gold, but that was not a prediction. All I know is how banks work and they don't just make unsecured loans. While assets were in decline where is the new money going to come from? So it was not possible to circulate much new money in the US. The sky was blue; its just that you look no further than the ground. Sorry, but I can predict $5 will get you a gallon of milk tomorrow with pretty high accuracy. That was how easy to see "hyper inflation" was a joke in 2008 and that every quarter since, nothing has changed to add liquidity to the goods and services economy. Go look at what I said in 2008. I asked what will secure new loans if not real estate?

As I keep saying most people can make many economic predictions. You confuse the money making predictions which is a case where most people are wrong and a few are correct. Everyone knows fuel oil demand will go up in winter. I can make that prediction with ease. So can everyone else so you cannot get it below market price. You to me are like someone who does not know people will want more heat in the winter, only in this case how our banking system works. Lots of people don't know how the banking system works, but some people do. Those people who didn't know how it works kept getting it wrong and still do.
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Old 08-02-2012, 12:36 AM
 
19,337 posts, read 16,935,945 times
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Quote:
Originally Posted by user_id View Post
Yep....and you are naturally ignoring the point, real estate values in cities are effected by real estate values outside of the city.
What's that a circular axiomatic argument style now?

Quote:
Nope......try actually reading the book. He prefers government ownership of land, but advocated for using taxation to create de facto government ownership due to existing laws. He was being realistic.....
I read the book.

Quote:
But I'm happy to see you're referring to higher quality authors, seeing you parrot that silly Jekyll Island book for months was getting old. So now you're stuck on George.... I hope Marx is next....Marx was more clever.
Where did I parrot that book? I am not even into PM backed currency and leaned much more towards a green backer. I have read and quoted Adam Smith, Ricardo, JS Mill, Henry George, Milton Freedman , Keynes , so unless you can produce any evidence of this you are to your usual self. And you are one to talk having no idea what capital is. You sounded like you dropped econ intro...and still do. Did you read Marx? What did you like or did not like about Das Kapital? I thought his chapters on commodities were a little long winded to be honest. I did like his accounts of 19th century British manufacturing.
Quote:
There is none, which is why its absurd to quote one author to support yourself. But its even more absurd given that he is a fringe economist, the vast majority think he is wrong.
Logical fallacy to appeal to majority.And they do agree with him because businesses use price discrimination all the time which is a Ricardian and Georgian principle. Its just that most people are unaware that "tax discrimination" is the same easily applied principle which will have no effect on production, just like successful price discrimination.

Quote:
Its called having an understanding of mathematics.... Due entirely to randomness, you're going to have people that "predicted" events accurately and people that "predicted" events inaccurately. You are going to also have, again entirely due to randomness, people that "predict" events accurately more than once....and these people become fooled by randomness and believe themselves to be a sort of oracle. So you're just misunderstand what people are saying, nobody is saying that nobody predicted such a thing, instead they are claiming that there is no way to forecast economic events with any sort of certitude. Get the difference?

There is no way to predict an economy with any sort of accuracy. You can speculate, but you can't forecast with any sort of reasonable certitude. Those, as yourself, that claim to know how a non-linear system with thousands of variables would behave if you manipulated one variable.....are deluding themselves.
The price of a gallon of milk will average well under $5 a gallon next quarter. I'll see you then to prove you wrong. And that was how easy it was to see what our banking and credit system was doing. Obama pleading with banks to loan? *chuckles* assets....they need assets to secure the loans...
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Old 08-02-2012, 12:51 AM
 
19,337 posts, read 16,935,945 times
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And speaking of these "minority" ideas, the theory of rent where Henry George merely applied it to industrial application of land rather than agricultural output is nothing entirely novel because we see JS Mill says:

This is the theory of rent, first propounded at the end of the last century by Dr. Anderson, and which, neglected at the time, was almost simultaneously rediscovered, twenty years later, by Sir Edward West, Mr. Malthus, and Mr. Ricardo. It is one of the cardinal doctrines of political economy; and until it was understood, no consistent explanation could be given of many of the more complicated industrial phenomena. The evidence of its truth will be manifested with a great increase of clearness, when we come to trace the laws of the phenomena of Value and Price. Until that is done, it is not possible to free the doctrine from every difficulty which may present itself, nor perhaps to convey, to those previously unacquainted with the subject, more than a general apprehension of the reasoning by which the theorem is arrived at. Some, however, of the objections commonly made to it, admit of a complete answer even in the present stage of our inquiries.
So how did a "cardinal doctrine" of political economy fall into such ill repute especially since, as I say, businesses extract rents with price discrimination all the time. How odd...
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