patrick.net

It's different this time.

Clearly prices can come down a lot more and still be above the inflation rate.

Or stay flat for another 20 years or so.

gregpfielding says

Or stay flat for another 20 years or so.

In nominal terms. What about after inflation?

My belief is that the Fed will keep trying to prop up housing by devaluing the dollar. The Fed is a private bank that was created to benefit the banks.

So it might be somewhat rational to buy rather than rent...as a hedge against inflation. But what if the Fed decides to tighten for whatever reason? We're at the mercy of the Fed.

The theory makes sense if there are no transformative changes between 1980 and now.

For starter, mortgage interest was around 12% in 1980 vs 4% now. There are other transformative changes (favorable and unfavorable) unaccounted for.

Maybe we can predict what they will do by what will create maximum benefit for the banks. Keeping asset prices super high and interest rates super low seems to be the key.....ZIRP forevermore.

They arent actually trying to destroy people financially (it feels that way when u get 1% on a CD and used to get 6-7% a handful of years ago) but the people being destroyed (savers, first time buyers) are really just fuel in the fire to keep the banks warm and cozy.

Under which scenario will mortgage rates ever be >7% again? According to the default numbers being 4 to 10 times higher than pre 2007 mortgage rates should be in double digits and down payments shoule be 30%+ (basically thats private hard money rates). But taxpayers are giving loans to people with poor credit, 3.5% down or less at 3% - also mods at 2%. The cost must be enourmous to subsidize all these bad loans that were written and are continuing to be written. Expensive as in you can have free healthcare for all OR subsidize banks/asset holders..... #2 was chose for us.

PockyClipsNow says

Maybe we can predict what they will do by what will create maximum benefit for the banks. Keeping asset prices super high and interest rates super low seems to be the key.....ZIRP forevermore.
They arent actually trying to destroy people financially (it feels that way when u get 1% on a CD and used to get 6-7% a handful of years ago) but the people being destroyed (savers, first time buyers) are really just fuel in the fire to keep the banks warm and cozy.

That sums it up well.

wthrfrk80 says

PockyClipsNow says

Maybe we can predict what they will do by what will create maximum benefit for the banks. Keeping asset prices super high and interest rates super low seems to be the key.....ZIRP forevermore.

They arent actually trying to destroy people financially (it feels that way when u get 1% on a CD and used to get 6-7% a handful of years ago) but the people being destroyed (savers, first time buyers) are really just fuel in the fire to keep the banks warm and cozy.

That sums it up well.

I'm thinking we have to have another 1980-1982 style recession to wring out all the inflationary pressures and set us up for the next growth spurt. This is what Volcker cooked up in 1979, sold it to Reagan because it was widely known he would be President (just as most people in the know agree that Romney will be President because of historical trends telling us Obama isn't electable with his polls the way they are) and they made it happen.

Let's dig into this. Government's two primary constituencies are old people and the military. We have retirees as a rapidly expanding demographic. They're earning 1-2 percent on their holdings when gasoline is three or four bucks and commodity prices are going crazy and less well off people are getting nailed at the grocery store. People out here talk about sustainability...well, guess what? THIS isn't sustainable economically speaking. We HAVE to get a new President and new party controlling the Senate and we HAVE to get a new Fed chief to help start the process of cleaning up the unholy mess (which everyone knew was coming) and moving us back to a point from which we can have a normal economy again.

Is there anything here I've missed?

PockyClipsNow says

the people being destroyed (savers, first time buyers) are really just fuel in the fire to keep the banks warm and cozy.

Yes, that really is exactly what's going on.

Democracy? I don't think so. Just a myth to keep the banks in power.

rootvg says

Is there anything here I've missed?

Yes, Romney is just more of the same. Probably even worse.