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Thoughts on Inflation, the Economy, Investments, and the Vaxx
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2021 Jun 28, 6:14am 3,308 views 32 comments
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10
Onvacation
2021 Jun 29, 9:49am
Onvacation
2021 Jun 29, 9:49am
Blue says
So, I'd get paid to buy a house?
I never thought the price of oil would go negative either.
housing can not sustain at this rate of growth with almost zero interest rate unless go down all the way to negative rate:
So, I'd get paid to buy a house?
I never thought the price of oil would go negative either.
11
B.A.C.A.H.
2021 Jun 29, 11:34am
B.A.C.A.H.
2021 Jun 29, 11:34am
Thank you for sharing your views. Thank you to the others for sharing theirs.
1. Will housing always be this expensive?
- I think so. Not necessarily in "nominal" terms, but in the ability to afford it. In the overall historical perspective, in recent decades till now housing has been incredibly inexpensive. Being a boarder in someone else's home, or boarding out spare space to others was the norm for centuries till the end of WW2. Where my in laws live in the Philippines it's still the norm. My question is actually, "will housing always be this affordable?"
2. Panic buying assets with deflation of those bubbles, or eventual stagflation? Yes and yes. I think the first is true, and the second is most likely.
3. Will there be a glut of homes? No. See my response to your first question.
4. What are decent investments right now? See Clambo's comment. I have nothing to add to his remarks.
5. Metals. You did not ask a question. I share Clambo's view.
6. Thinking selling truck and boat.
I own a truck. It's the same truck I've had for 15 years. I own it for occasional SFH type hauling needs. But! To make it work for me, and to rationalize the cost, it must pencil out as a reasonably priced everyday transportation vehicle. A truck like that, is not just a truck: it's transportation.
A boat. Unless it's some dinky John-boat type thing, it's too big of an asset for recreation in view of the cost of ownership. Especially for occasional use, one can be rented. This is not unlike owning versus renting an airplane, vacation home, timeshare or whatever. Same concept for a boat.
1. Will housing always be this expensive?
- I think so. Not necessarily in "nominal" terms, but in the ability to afford it. In the overall historical perspective, in recent decades till now housing has been incredibly inexpensive. Being a boarder in someone else's home, or boarding out spare space to others was the norm for centuries till the end of WW2. Where my in laws live in the Philippines it's still the norm. My question is actually, "will housing always be this affordable?"
2. Panic buying assets with deflation of those bubbles, or eventual stagflation? Yes and yes. I think the first is true, and the second is most likely.
3. Will there be a glut of homes? No. See my response to your first question.
4. What are decent investments right now? See Clambo's comment. I have nothing to add to his remarks.
5. Metals. You did not ask a question. I share Clambo's view.
6. Thinking selling truck and boat.
I own a truck. It's the same truck I've had for 15 years. I own it for occasional SFH type hauling needs. But! To make it work for me, and to rationalize the cost, it must pencil out as a reasonably priced everyday transportation vehicle. A truck like that, is not just a truck: it's transportation.
A boat. Unless it's some dinky John-boat type thing, it's too big of an asset for recreation in view of the cost of ownership. Especially for occasional use, one can be rented. This is not unlike owning versus renting an airplane, vacation home, timeshare or whatever. Same concept for a boat.
12
Blue
2021 Jun 29, 12:09pm
Onvacation says
If never ending QE and lowering interest both in US and elsewhere continue and the inflation they pumping, the answer is loud and clear.
So, I'd get paid to buy a house?
If never ending QE and lowering interest both in US and elsewhere continue and the inflation they pumping, the answer is loud and clear.
13
HeadSet
2021 Jun 29, 8:26pm
HeadSet
2021 Jun 29, 8:26pm
HunterTits says
Do you think Boomers have that much cash? Or that much stock?
When interest rates soar as the bulk of the Boomers enter retirement and pull vast amounts of capital out of the economy to consume
Do you think Boomers have that much cash? Or that much stock?
14
Patrick
2021 Jul 1, 8:32pm
Patrick
2021 Jul 1, 8:32pm
https://www.statista.com/statistics/1031884/value-pound-sterling-since/
The British pound as measured in current British pounds.
The British pound as measured in current British pounds.
16
komputodo
2021 Jul 1, 9:13pm
komputodo
2021 Jul 1, 9:13pm
Onvacation says
That could work.....get paid 10k per year to live in the house but pay 50k per yr in property taxes
So, I'd get paid to buy a house?
That could work.....get paid 10k per year to live in the house but pay 50k per yr in property taxes
17
komputodo
2021 Jul 1, 9:18pm
komputodo
2021 Jul 1, 9:18pm
joshuatrio says
Can you think of anything not made in china that has dropped in price significantly for the long term?
Is housing always going to be this fucking expensive,
Can you think of anything not made in china that has dropped in price significantly for the long term?
18
richwicks
2021 Jul 1, 9:26pm
richwicks
2021 Jul 1, 9:26pm
komputodo says
CHRIST! What does your house look like? $50K in property taxes? That's nuts.
Onvacation saysSo, I'd get paid to buy a house?
That could work.....get paid 10k per year to live in the house but pay 50k per yr in property taxes
CHRIST! What does your house look like? $50K in property taxes? That's nuts.
19
SunnyvaleCA
2021 Jul 2, 12:17am
joshuatrio says
It seems to me there are 2 components to the cost of a house:
(1) The cost to construct and maintain the house. That's not increasing if you consider how many extra features are in new houses today (running water, insulation, central heating, electricity, etc.). That said, there are government mandates that run up the bill; however, there is some (minimal) utility in smoke detectors, non-lead paint, non-asbestos insulation, etc. Overall, as much as we might complain, I don't think the building costs of houses, when adjusted for content and inflation, are increasing.
(2) Location. That's what's going up massively in the desirable areas. I assume it will continue to go up indefinitely.
1) Is housing always going to be this fucking expensive, and is it going to keep going up due to inflation?
It seems to me there are 2 components to the cost of a house:
(1) The cost to construct and maintain the house. That's not increasing if you consider how many extra features are in new houses today (running water, insulation, central heating, electricity, etc.). That said, there are government mandates that run up the bill; however, there is some (minimal) utility in smoke detectors, non-lead paint, non-asbestos insulation, etc. Overall, as much as we might complain, I don't think the building costs of houses, when adjusted for content and inflation, are increasing.
(2) Location. That's what's going up massively in the desirable areas. I assume it will continue to go up indefinitely.
20
Patrick
2021 Jul 2, 10:28am
Patrick
2021 Jul 2, 10:28am
Yes, most people fail to distinguish between the house and the land.
They are extremely different.
The house sits out in the rain and slowly rots, a liability.
The land is forever and is an asset.
We should tax the land and never the house on it.
They are extremely different.
The house sits out in the rain and slowly rots, a liability.
The land is forever and is an asset.
We should tax the land and never the house on it.
21
Hircus
2021 Jul 2, 11:10am
Hircus
2021 Jul 2, 11:10am
I recall some years back Logan M, the mortgage loan dude, was strongly of the opinion that the us would see high demographic fueled housing demand in the early to mid 2020's. I forget what his arguments were, but he seemed to feel strongly about it, so it always stuck with me.
22
Patrick
2021 Jul 2, 12:07pm
Patrick
2021 Jul 2, 12:07pm
Hircus says
@LoganMohtashami
I recall some years back Logan M, the mortgage loan dude, was strongly of the opinion that the us would see high demographic fueled housing demand in the early to mid 2020's. I forget what his arguments were, but he seemed to feel strongly about it, so it always stuck with me.
@LoganMohtashami
23
richwicks
2021 Jul 2, 12:52pm
richwicks
2021 Jul 2, 12:52pm
Patrick says
Exactly - somebody that builds a mansion on their plot shouldn't be taxed more than somebody that builds a shack on their land.
But I'd give one exception - utterly undeveloped land shouldn't be taxed at all. So instead of having nutcases camp out in a 1000 year old tree to preserve it, they can just buy it, and make it part of a permanent reserve.
We should tax the land and never the house on it.
Exactly - somebody that builds a mansion on their plot shouldn't be taxed more than somebody that builds a shack on their land.
But I'd give one exception - utterly undeveloped land shouldn't be taxed at all. So instead of having nutcases camp out in a 1000 year old tree to preserve it, they can just buy it, and make it part of a permanent reserve.
24
Patrick
2021 Jul 2, 12:58pm
Patrick
2021 Jul 2, 12:58pm
But some undeveloped land does benefit from public services funded by taxes. Fire departments for example.
Also, it's a common way to make money to leave a lot undeveloped and then benefit from others around you paying to develop the area. You reap the increase in land value from the work of others, pretty much the definition of "non-productive rent-seeking".
Also, it's a common way to make money to leave a lot undeveloped and then benefit from others around you paying to develop the area. You reap the increase in land value from the work of others, pretty much the definition of "non-productive rent-seeking".
25
HeadSet
2021 Jul 2, 3:23pm
HeadSet
2021 Jul 2, 3:23pm
Patrick says
What do you suppose the levy would be? That is, about how much per acre? Would the county or state get the tax? The federal government owns an ungodly amount of land, would they be subject to a local levy?
I wonder if a high land tax levy would make towns look like Amsterdam canal property, where houses are super skinny since they were taxed by waterfront footage. Everyone in a Georgist tax local may build tall structures with as little a land footprint as possible.
If there were no other taxes, the land levy would be need to be high, or the government may cut back.
We should tax the land and never the house on it.
What do you suppose the levy would be? That is, about how much per acre? Would the county or state get the tax? The federal government owns an ungodly amount of land, would they be subject to a local levy?
I wonder if a high land tax levy would make towns look like Amsterdam canal property, where houses are super skinny since they were taxed by waterfront footage. Everyone in a Georgist tax local may build tall structures with as little a land footprint as possible.
If there were no other taxes, the land levy would be need to be high, or the government may cut back.
26
Patrick
2021 Jul 2, 5:26pm
Patrick
2021 Jul 2, 5:26pm
HeadSet says
I asked a knowledgable Georgist about this once and I liked his answer: Let people bid on the property taxes to own the land the next time it comes up for sale. High bidder on property taxes gets the land ownership. Sell the house separately (maybe to the same person).
The one willing to pay the most in property taxes gets title to the land. People won't pay more in property taxes than they can get back from owning the land, or at least what they can afford.
What do you suppose the levy would be?
I asked a knowledgable Georgist about this once and I liked his answer: Let people bid on the property taxes to own the land the next time it comes up for sale. High bidder on property taxes gets the land ownership. Sell the house separately (maybe to the same person).
The one willing to pay the most in property taxes gets title to the land. People won't pay more in property taxes than they can get back from owning the land, or at least what they can afford.
27
Patrick
2021 Jul 2, 5:28pm
Patrick
2021 Jul 2, 5:28pm
HeadSet says
Same as it is now.
HeadSet says
Interesting idea.
Would the county or state get the tax?
Same as it is now.
HeadSet says
The federal government owns an ungodly amount of land, would they be subject to a local levy?
Interesting idea.
28
HeadSet
2021 Jul 2, 6:00pm
HeadSet
2021 Jul 2, 6:00pm
Patrick says
Under that system a Bill Gates could buy up all the land and charge rent to whoever owns or uses the buildings on it. Reminds me of the old English nobility who earned vast sums from rents paid by peasants living or working on the Earl's fief.
I asked a knowledgable Georgist about this once and I liked his answer: Let people bid on the property taxes to own the land the next time it comes up for sale. High bidder on property taxes gets the land ownership. Sell the house separately (maybe to the same person).
Under that system a Bill Gates could buy up all the land and charge rent to whoever owns or uses the buildings on it. Reminds me of the old English nobility who earned vast sums from rents paid by peasants living or working on the Earl's fief.
29
PeopleUnited
2021 Jul 2, 7:33pm
PeopleUnited
2021 Jul 2, 7:33pm
Patrick says
The house is only a liability in the long term, the reason it has value is for its usefulness today and in the near future.
The land is more permanent this is true, but floods, landslides, droughts, earthquakes, volcanos, and human intervention including changing laws means the utility/value of land is not a constant.
How about we don’t tax anything and instead rely on free will offerings.
Before we had state and federal welfare we had private charities providing medical care, food and housing, education etc... for those in need. Now that the government has taken control of most of these things we actually have more poverty than ever. Taxes are not the answer, free will is. Local governments could perhaps justify a sales tax of some sort to support local infrastructure and police. Tarrifs and immigration taxes (we should charge people to become US citizen who were not born here) could fund military and border security. Also any corporations that do business outside this country could pay a tariff if they bring those earnings back to USA. But there is no need for income or property tax. It does not prevent wealthy from becoming more wealthy.
The best way to prevent the wealthy from becoming exorbitantly wealthy would be to give every family a piece of real estate (land) of roughly equal value, let them use it, sell it, rent it out, or do whatever they wish with it for a period of 50 years. After 50 years the land is returned to the family that originally was bestowed it. This is called the jubilee system and it works to limit inter generational poverty while also rewarding those who make wise choices with their resources.
The house sits out in the rain and slowly rots, a liability.
The land is forever and is an asset.
We should tax the land and never the house on it.
The house is only a liability in the long term, the reason it has value is for its usefulness today and in the near future.
The land is more permanent this is true, but floods, landslides, droughts, earthquakes, volcanos, and human intervention including changing laws means the utility/value of land is not a constant.
How about we don’t tax anything and instead rely on free will offerings.
Before we had state and federal welfare we had private charities providing medical care, food and housing, education etc... for those in need. Now that the government has taken control of most of these things we actually have more poverty than ever. Taxes are not the answer, free will is. Local governments could perhaps justify a sales tax of some sort to support local infrastructure and police. Tarrifs and immigration taxes (we should charge people to become US citizen who were not born here) could fund military and border security. Also any corporations that do business outside this country could pay a tariff if they bring those earnings back to USA. But there is no need for income or property tax. It does not prevent wealthy from becoming more wealthy.
The best way to prevent the wealthy from becoming exorbitantly wealthy would be to give every family a piece of real estate (land) of roughly equal value, let them use it, sell it, rent it out, or do whatever they wish with it for a period of 50 years. After 50 years the land is returned to the family that originally was bestowed it. This is called the jubilee system and it works to limit inter generational poverty while also rewarding those who make wise choices with their resources.
30
PeopleUnited
2021 Jul 2, 7:43pm
PeopleUnited
2021 Jul 2, 7:43pm
joshuatrio says
As long as people have a need for housing and the means to pay for it, prices will not fluctuate much from the upward trajectory they are on. So unless people start dying en masse, more houses are built than can be used, or Earned and investment incomes start to be reduced dramatically I don’t see how housing prices fall much going forward. Interest rates cannot go up without crashing the house of cards called “the economy “ which is built on debt and speculation.
As long as the dollar continues to be the reserve currency of the world things will continue as they have been. When that changes all bets are off. War, depression and perhaps bankruptcy which could result in anarchy and/or hostile takeover of the USA are all quite possible if the world stops using the American petrodollar as their king fiat currency.
There's a ton of questions to be answered and if you have an input on any of these ramblings, I'd love to hear it:
As long as people have a need for housing and the means to pay for it, prices will not fluctuate much from the upward trajectory they are on. So unless people start dying en masse, more houses are built than can be used, or Earned and investment incomes start to be reduced dramatically I don’t see how housing prices fall much going forward. Interest rates cannot go up without crashing the house of cards called “the economy “ which is built on debt and speculation.
As long as the dollar continues to be the reserve currency of the world things will continue as they have been. When that changes all bets are off. War, depression and perhaps bankruptcy which could result in anarchy and/or hostile takeover of the USA are all quite possible if the world stops using the American petrodollar as their king fiat currency.
31
Patrick
2021 Jul 2, 9:40pm
Patrick
2021 Jul 2, 9:40pm
HeadSet says
He could try now anyway, but he couldn't really buy all that much with a measly $100 billion.
All the real estate in the US is worth about $34 trillion, so he could buy about 0.3% of it.
And most of it isn't on the market anyway.
Under that system a Bill Gates could buy up all the land and charge rent to whoever owns or uses the buildings on it.
He could try now anyway, but he couldn't really buy all that much with a measly $100 billion.
All the real estate in the US is worth about $34 trillion, so he could buy about 0.3% of it.
And most of it isn't on the market anyway.
32
HeadSet
2021 Jul 3, 7:00am
HeadSet
2021 Jul 3, 7:00am
Patrick says
That is the difference - more land would be forced on the market at tax bid value. And Bill and others would not need all the land in the country, just current high value and some strategic undeveloped areas. We would have more rich family "Dukes" like the one that owns that Hawaiian island of Niihau:
The family that owns the land reserves the right to evict people, regulating who is allowed to visit. There are also strictly enforced rules for those who live on Niihau - residents can't partake in illicit substances or alcohol, and they have to follow certain codes with regard to appearance. The small number of people who live on the island don't pay rent or buy their own food - it's all supplied by the island's owners.
https://www.msn.com/en-us/news/us/inside-the-privately-owned-forbidden-island-of-hawaii/ss-BB17AAE1
And most of it isn't on the market anyway.
That is the difference - more land would be forced on the market at tax bid value. And Bill and others would not need all the land in the country, just current high value and some strategic undeveloped areas. We would have more rich family "Dukes" like the one that owns that Hawaiian island of Niihau:
The family that owns the land reserves the right to evict people, regulating who is allowed to visit. There are also strictly enforced rules for those who live on Niihau - residents can't partake in illicit substances or alcohol, and they have to follow certain codes with regard to appearance. The small number of people who live on the island don't pay rent or buy their own food - it's all supplied by the island's owners.
https://www.msn.com/en-us/news/us/inside-the-privately-owned-forbidden-island-of-hawaii/ss-BB17AAE1
1) Is housing always going to be this fucking expensive, and is it going to keep going up due to inflation? I'm considering buying a rental or two since my brother is a realtor and is making a good return on them - he just bought a nice townhouse last week and had it rented next day.
2) Or are people buying up assets (raising price and restricting supply) in panic due to all the printing, but we'll eventually deflate like last time, or end up in more a stagflation scenario?
3) What happens this coming winter if the vaxx were to knock out a huge portion of our population? Do we then end up with a glut of homes?
4) What are decent investments right now? Disclaimer, I went in pretty big on oil 3 months ago and am up big, but I need to diversify - and fuck big tech - no interested.
5) Metals.... I'm hesitant on the inflation mindset being here for good (again) because the price of metals hasn't followed the price of housing/crypto/stock market over the last 6 months. In fact, they seem pretty fucking stagnant to me, but I'm still open to buying a few monster boxes of SAE's...
6) I have a truck and a boat, but have recently been thinking about selling them, since they are both now magically worth more than I paid, buying a Prius Prime, and dumping the rest into big oil. Disclaimer: I have no need for a truck, I just like it. Totally impractical.
Let me hear your thoughts/theories. I've got a shit ton of stuff just rolling around in my head, but am trying to piece together a half decent strategy for navigating the next several years/months.