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Robert Pretcher said himself in a video that although he may sound like an extremist - he expects home prices to eventually collapse to 90-95% devaluation of it’s highest peak.
He also expects deflation. Why? Because although the money supply is very high - you have to understand that the debt on that money supply is close to 8-10 times it’s size.
Where did that debt come from? From easy credit to anyone. I believe a lot of people don’t understand that US has already gone through inflation…. When? Through the bubble years when everyone was spending on credit cards, easy mortgage to anyone, excessive student loans, & excessive business expansion.
Banks do not really lend you the money. They only pretend to lend you the money as if they actually have that money in reserve when they actually do not. They are allowed to lend I believe 8 times more than they actually have in reserve.
This effectively means that a bank is pretending to lend you money which you believe is actually available in the monetary supply within a economic system - when truthfully that money never existed in the first place - it was electronically credited out of nowhere - basically electronically printed when you were approved for a loan which you applied for (mortgage, college loan or business funding) - and then electronically credited to you.
You are basically fooled into believing you owe the bank money - when you don’t because they didn’t actually take that money available in the monetary supply within a economic system - instead they electronically printed about 80% of your “loan” themselves - while they only really actually lent you 10-20% of the “loan”.
Let me get to the main point: The bankers have effectively made people chase $14-20 trillion dollars actually available within the economic system to pay off $140-160 trillion…
How does that work? It doesn’t!
This formula makes individuals in a economic system chase after money - money becomes scarce - even though the supply of the money is quite high and it is backed by nothing - the debt accumulated is so many times greater than the supply available.
This mathematically creates a depression and deflation by manipulating the supply of money within an economic system while at the same time manipulating the debt within an economic system - so the debt is many times more than the supply.
Now that the banks are no longer “lending” (counterfeiting) much…. The defaults just keep piling up - and that’s exactly what mathematically has been engineered.
Though the government is in the mortgage and loan business now. I understand that haven’t fully close their own “lending” (counterfeiting) however once Freddie & Fannie along with Sallie is ended - expect the defaults to skyrocket & the contraction of the economy to increase many times - because then you can no longer pay off debt from more debt.
First you will have deflation - then after all the defaults, bankruptcies & foreclosures have been processed through - maybe in 2-10 years depending on how things proceed - you will have MASSIVE inflation due to the supply of the money and the fact that it is backed by nothing.
The dollar is definitely not stable however understand other currencies are much worse in how solid they are.
Deflation is what will hurt most americans not inflation in my humble opinion. Inflation will help americans to easily pay off their mortgages, student loans, & credit cards. This will free them from debt slavery while at the same-time allow them to keep their homes and have businesses create jobs.
Inflation will hurt savers though - but savers are very few in this economy and it is actually very tough for most americans to save money even though a lot of them are trying to cutback on useless luxuries. Most americans are either under debt or live paycheck to paycheck from being homeless.
What I am saying is exactly what happened in 1929-1933. Too much debt with very little money available to pay it off. The federal reserve also contracted the money supply which worsened things even more.
The United States of America has been hijacked by wall street & international bankers, I’m sorry but that is just the cold hard truth…
The stimulus & bailouts were just to temporary - once QE2 ends in June 30 (10 days from now) - if nothing else is done to get more money into the system - the whole thing is going to collapse eventually when you go by the math. Math never lies - opinions do.
The bankers did exactly the same-thing in 1929 - put a little bit of money in the stock market to keep things a little bit afloat after a major crash - then in 1933 pull out the money - triggering a much bigger crash…
The same game it seems they are playing - just on a much larger scale - which will make the collapse worse.
Stock market is rigged - get out of it. It’s not worth it if the bull runs continues - too much risk - if you still make money - good for you but understand that you are taking a lot of risk when you should consider protecting yourself.
Also whenever the stock market crashes - New York State real estate collapses but the the collapse of that market spreads a bit to other markets.
What do you think about my perspective? With these factors in mind of what the banks have done - I can confidently say that the housing market definitely is in risk of falling 90-95% - even though that may sound extreme - when you look at the math behind it - it is actually very logical. Again - Math doesn’t lie, opinions do.
Sure gas prices are rising along with groceries and utilities but that is not a full perspective in my humble opinion of inflation vs. deflation. I do think that eventually they will those prices will fall down. In April 2008 -gas was rising but then it fall. I believe it’s simply up temporarily due to artificial prop ups to the economy by the government.
Grocery stores by the way are losing money.
Anyway so freely discuss what’s your perspective on this matter in a constructive manner.
I do believe that both inflation and deflation will happen - just at different times. And maybe also even with different necessities possibly. Though generally I believe all asset prices and commodity prices will deflate but then inflate.
Much of the answers you're looking for are part of the debate between Keynesian and Austrian school economics. Unfortunately for us, Mr Bernanke and Mr Geithner are full blown Keynes guys. Now that Geithner announced moving on to bigger and better things (aka cushy job at Goldman), maybe things can change one day.
95% lol - Does 100k homes at the peak selling for 5k really make sense to you? Maybe in Weimar Republic 2 I guess. But at that point we have bigger problems to worry about.
I can't wait! It'll be great, I can own a dozen houses all for less than I pay for a sandwich.
Get real. Looney tunes types inhabit YouTube.
I'll pretend to buy my sandwich with the money that the bank pretends to lend me and then I'll pretend that when my MasterCard bill I'll pay with the money my employer pretends to put in bank account...
It does feel good not to have a mortgage. That whole buy what payment you can afford is flawed to say the least. That has even got people in a lot of trouble with auto financing.
I can't wait! It'll be great, I can own a dozen houses all for less than I pay for a sandwich.
Get real. Looney tunes types inhabit YouTube.
I'll pretend to buy my sandwich with the money that the bank pretends to lend me and then I'll pretend that when my MasterCard bill I'll pay with the money my employer pretends to put in bank account...
sheep...
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered."
"I believe that banking institutions are more dangerous to our liberties than standing armies..."
"The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
Of course it's rubbish when you have something to lose from this happening. As you expressed interest in the stock market...
Quote:
Originally Posted by cdcdguy
"I would long term invest this money, and re invest any earning. I could probably afford to add another 1k every few months too. Since the market is way up over 2 years ago, is it still a good time to buy stocks?"
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I can see that happening to a certain extent, probably not 95%, in areas with lots of vacant homes and no jobs, such as suburban areas where long-haul commuters bought to avoid the high prices closer in. Stockton, CA for example.
When homes are still needed to accommodate new good paying jobs home prices are already going back up. Here for example, with companies like Microsoft, Boeing, Amazon and Amgen hiring, new developments have resumed again. These are still selling for over $500,000+ on minimum sized lots, and that helps keeps prices high on older homes on big lots and not so close together. Sure, these would have been close to a million 3 years ago, but that's only about a $30-40% drop.
Illahee-The Burnsteads in Sammamish, Washington by The Burnsteads from $598,900 - AmericanHomeGuides.com (http://www.americanhomeguides.com/New-Homes/Washington/Sammamish/7909/ - broken link)
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