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To put this another way, if there is high inflation The Fed will have to raise rates to battle it.
If interest rates go up, logically how would you expect real estate to act relative to other forms of investing?
It seems the Fed has turned “investors” into trained seals. Focus only on interest rates, snap that fish the Fed tosses on a regular basis and clap those fins. Meanwhile the underlying currency is debased and the rising tide of debt threatens to wash away the circus tent.
Raise interest rates to fight inflation? Sure, like that is ever going to happen with Debt/GDP at 120%. IMO the Fed may indeed raise rates, but only to defend the USD’s reserve status. It would be a calamity.
No one ever thought we would see double digit inflation back in the early 1960’s ...it just wasn’t in the cards at all...inflation was 2.50% -3.50% . who would have guessed in 3 years time it would have doubled and by 1974 it would be 11%.
with inflation so low who ever expected a 4x increase coming .
but whether we get it or not really wasn't the discussion .
i simply debunked the myth that a mortgage is an inflation hedge and that in times of HIGH inflation or hyper inflation real estate does well .
I'm within striking distance of my 2.625% 5 year ARM.
I was torn between paying it off by the end of this year or waiting for a post covid housing crash but then I realized the feds will do everything to make sure people don't lose their homes.
The FED is more concerned about the banks not the homeowners.
We've already been experiencing high inflation via housing and healthcare.
Yet they can't even raise rates without the stock market melting down.
Not overall ..
The CPI looks at 1500 mini economies ...we are all different......Healthcare for as many as 80 million seniors is relatively cheap As medicare and advantage plans are cheap compared to what others pay .
Millions in nyc are getting no rent increases and have seen little in rent increases the last few years because half of all nyc and the boroughs has stabilized apartments ...energy is a fraction of what it was a decade ago ...
So you can’t go by what you see or think.....all parts of the country see different inflation .....the biggest things are housing ,transportation and taxes and we all have different rates of inflation
The CPI looks at 1500 mini economies ...we are all different......Healthcare for as many as 80 million seniors is relatively cheap As medicare and advantage plans are cheap compared to what others pay .
Millions in nyc are getting no rent increases and have seen little in rent increases the last few years because half of all nyc and the boroughs has stabilized apartments ...energy is a fraction of what it was a decade ago ...
So you can’t go by what you see or think.....all parts of the country see different inflation .....the biggest things are housing ,transportation and taxes and we all have different rates of inflation
And education.
Which is going to get more expensive. I've got bad news for people who think the shift to online education will be cheaper. The groundskeeper's salary was never what blew up your college's budget.
Which is going to get more expensive. I've got bad news for people who think the shift to online education will be cheaper. The groundskeeper's salary was never what blew up your college's budget.
College is now free here at city and state colleges for tens of thousands
“We've made college tuition-free for middle class New Yorkers. ... Under this groundbreaking program, more than 940,000 middle-class families and individuals making up to $125,000 per year will qualify to attend college tuition-free at all CUNY and SUNY two- and four-year colleges in New York State.“
It seems the Fed has turned “investors” into trained seals. Focus only on interest rates, snap that fish the Fed tosses on a regular basis and clap those fins. Meanwhile the underlying currency is debased and the rising tide of debt threatens to wash away the circus tent.
Raise interest rates to fight inflation? Sure, like that is ever going to happen with Debt/GDP at 120%. IMO the Fed may indeed raise rates, but only to defend the USD’s reserve status. It would be a calamity.
The Federal Reserve, after expenses, forgives the interest charged to the US Federal Government each year. It is the underpinning of that expected but still discretionary separation that allows the Federal Reserve Note (ie USD) such powerful brand recognition in terms of currencies.
If higher inflation were triggered, it's best to assume the Fed will raise rates. At the end of the day, the Fed cares little for the equities market, but the bond market affects the banking industry. That's what they want to keep functioning. Equities also benefit from a liquid bond market.
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