INFLATION--we may be seeing some housing deflation

Mona, give it up you don't understand the "underpiling" of Bitcoin, so further discussion is useless.

 

This proves the dollars instability and diminishing value, right? Not what VH is proposing.

 

Can you either explain or show me where to look this up? I googled and got a huge goose egg. In fact there is no definition I could find for the word underpile or underpiling. You must have some very advanced knowledge.

 

Next Gen Money, Part 1: Texas Re-Imagines The Dollar | ZeroHedge

 

Yes of course a new gold backed digital currency from the state government of Texas would be better than the dollar. But history tells us that state power will eventually corrupt that system to its own interests. In other words, it would turn into the fiat dollar Fed system. A gold standard's value comes from its limited supply and gold's price inflexibility. But if government is controlling that system at some point those in power will sour on their lack of ability to create new units. Every king, lord, emperor, parliament, republic, and democracy has devalued currency in order to steal value away from citizens and use that value to buy what they can't politically afford to tax.

The alternative is for Texas and other states to open the currency market. Let private currencies compete. Then competition will keep currency honest or stable or valuable. Pick your adjective. Let bitcoin, ethereum, a gold standard currency, a silver standard currency, an oil standard currency, a basket of commodities currency all compete to see which holds its value best long term and serves society best. The problem with the dollar all along was that the US federal government was in control of it. We need the separation of money and state.


Property rights applied to knowledge
The Ethics Of Liberty - Knowledge, True And False

 

Dude, that is the same theory that backs fiat currencies issued by nations.

 

No it isn't. Just because I mention several commodities you have heard before as a standard doesn't mean it is what you are talking about. This is clear looking at 2 things.

1) Fiat means backed 0, zip, nada, nothing. The concepts I propose aren't fiat. They are currency based on commodity prices. Like $1 is 1 oz of gold or $1 is a gallon of oil, etc.
2) I am proposing that nations (better described as governments) are not involved in administering the currency. Their role is to stay the hell out of it.

In both cases these are the exact opposite of what you are talking about.

 

PCE up significantly. Expectation was 3.9.
An unexpected increase: Fed's favorite inflation measure heated up last month | CNN Business

 

The mechanism is the same: folks can move their money to the currency they think is best. Traders do this every day.

 

Your argument is that citizens of countries shouldn’t be held hostage to their government’s currency. However the example you gave also works for global currencies and commodities. Dude.

 

Debt Ceiling negotiation is getting interesting. I'm sure it will be resolved in the 11th hr by kicking the can down the road, but i am glad that McCarthy is standing his ground. We are going to have to pay the piper on this some time and even though it would hurt, I'm ok with McCarthy holding the line even if it means impacts to the economy, etc.

 

He will cave.

 

If I am to buy something in the US, I have to use USD. If I buy something in France I have to use a EURO. If I buy something in Brazil I have to use a Real.

I am talking about a currency market in terms of use to make purchases, not as investment vehicles. We are talking about 2 different things.

 

No, you are the one confused. The currency traders keep the currencies honest just like equity traders keep the market honest even if you don’t own any stock directly. Currencies and equities respond to how money is being moved around. That is the basic mechanism that you proposed for citizens. The same principle works for national currencies.

 

Like I said, we are talking about 2 different things. I am not disagreeing with what you say above. I am talking about something else entirely.

 

Okay but you are still confused. If a country doubles their money supply overnight (2:1 money split), the price of goods automatically double in price but so will wages. There is no net impact on domestically produced goods. The exchange rate should double as well, which would make imported goods 2x price as well. Now, you may be thinking that is all well and good for those with wages, but what about retired people? Well, those folks can invest in gold and commodities or stocks or other assets to hedge inflation risk. Wages are still increasing at a 5% annual clip for the reasons stated above. You need to get over your mental issue with fiat currency.

 

This is untrue. Prices don't change immediately and the change isn't even. The price ratios between goods does not remain the same. Please read up about the Cantillon effect.

Because of Inflation, We’re Financing the Financiers | Jessica Schultz

Cantillon observed that labor rates are the last or one of the last things to increase when inflation hits. So value is stolen from those from the mid to low tier social classes.

They can and they do but because those prices don't change in the same ways at the same time it really doesn't protect retired people from inflation theft.

I will never get over my issue with fiat currency because it is an unjust and immoral thing. It violates the biblical principle of just weights and measures. I explain the logical progression in the link below. God calls it all an abomination.

God's Monetary Policy In The Bible

 

What happens when the Cantillon effect is in reverse? When wage increases are higher than inflation, like now? If you avoid runaway inflation, it all balances out, such as when the Fed starts to tighten money supply. Did the financiers of those failed banks benefit from the Cantillon effect? Yes, in one direction but not the reverse!

Your opposition to fiat money is irrational for the following reason:
1. Maintaining the gold standard requires a national bank to not reverse policy. Just declaring and/or establishing a gold standard is not enough. You have to maintain the commitment to it. Otherwise it’s not a standard but a fair weather policy.
2. The same commitment is required to maintaining low inflation of fiat currency (you need the political courage to raise interest rates when needed).

Both monetary policies require the same of our government! Thus many of the arguments you think are special to gold standard equally apply to fiat currency. You’re simply blind to it by your kooky attraction to gold.

 

I don't believe labor rates are increasing faster than inflation. I look at my own income and that of my wife. I look at the many who are incentivized not to work because it isn't worth it. I am open to data though. I know you have shown some things on this site, but you are the only one I have seen with that kind of data. I need some more convincing on that.

I, like you, am glad that the Fed is reigning in inflation. That is a good thing.

The bank failures are a mixed messaged. Only a few are allowed to fail before the bailouts come. We have seen no more in the US since SVB. The rich depositor were bailed out. This is evidence that the political and banking classes are helped while normal Americans are not. Also, the failed banks did not fail because of the inflation. It wasn't the Cantillon effect or even it in reverse. The failures were caused by the Fed raising the rates, which is a money tightening action, which means Cantillon isn't coming into play.

I think I have stated a very rational case for my dislike of fiat currency. My article goes in depth on the logical case and starts with divine revelation as the start.

What you fail to see in your 2 points is that commodity standards don't make it impossible to inflate the currency supply. But they do make it more difficult. Both FDR and Nixon had to suspend the gold standard because they had devalued the dollar enough to cause other countries to exchange their dollars for gold. Gold is a tether that keeps government more honest than they would otherwise be. But it can't keep them from being dishonest. Without a standard the currency can be depreciated much more easily and quickly. It eliminates a natural control or feedback loop. The proof is in the graphs below.

 

The Cantillon effect is bankers or investors getting a hold of the extra money generated by fiat and then buying assets before the cost basis is raised due to inflation taking root (from said money generation as it spreads through the economy). The banks suffered a reverse Cantillon effect whereby the Fed restricted money by raising interest rates. In this case, the bank had to pay depositors a higher interest than what they could borrow from the Fed. So, yes, it’s exactly a reverse Cantillon effect.

 

Ok. I won't argue with this point. Good enough.

 

Another one for Monahorns.

 

Deflation is happening:


Case-Shiller National Home Price Index for March to be released this week. The consensus estimate is for a 1.5% year-over-year decline, after a 2% increase in February. Home prices slid for seven consecutive months before rising 0.2% in February. The index is 4.9% below its record high from last June.

 

Good. Housing prices have gotten way out of control. Hopefully, it's the large investment companies that take most of the hit and are left with portfolios of homes worth far less than they paid for them. They are the mangy, rabid jackals responsible, in large part, for the absurd spike in housing prices. Supply and demand of actual homeowner/residents only accounted for part of it.

The big boys should have stayed with their usual portfolios of multi-family housing; the smart ones did. The injection of big-time international capital into the U.S. single-family housing market was a sorry thing and a lousy development, so I don't mind if those a$$holes behind it fall flat on their faces.

 

Also, while your property(ies) went far up in value with the tax assessor, and quickly, don't expect the values to come down so rapidly with the tax assessor. As far as the tax assessor is concerned, your property is worth just as much as it was before the downturn. Any decline of property value on the tax rolls will be slow-to-come and marginal. The greed, and desire for control, runs strong in local governments (as well as the federal gov't).

 

When looking at the Wall Street companies buying up homes, you have a small list of corporations that have shaped this growing trend. One of the first companies to make waves in this market is Blackstone. In 2012, Blackstone purchased Invitation Homes, a rental company owning around 80,000 homes. In 2019, Blackstone sold Invitation Homes, only to purchase Home Partners of America in 2021. Since then, Blackstone has been an active powerhouse in the American home market.

Other large companies in the American home market are J.P. Morgan Asset Management, Goldman Sachs, Mynd Management, Pretium, and American Homes 4 Rent. These companies have bought and rented out tens of thousands of single-family homes for the past three years. American Homes 4 Rent, for example, owned over 52,000 homes in 2019, operating in over 22 states, with the largest concentration in Atlanta, Georgia.

Top 5 States for Investor Homes
Position State Percentage of Homes Sold by Investors in 2021
1 Georgia 33%
2 Arizona 31%
3 Nevada 30%
4 California 29%
5 Texas 29%

Might the fact that corporate investors snapped up 15 percent of U.S. homes for sale in the first quarter of this year have something to do with it? The Wall Street Journal reported in April that an investment firm won a bidding war to purchase an entire neighborhood worth of single-family homes in Conroe, Texas.

Let’s focus on Invitation Homes, a $21 billion publicly traded company that was spun off from Blackstone, the world’s largest private equity company. Invitation Homes bought 90 percent of the homes for sale in some ZIP codes in Atlanta.

More info on some wonderful people in the financial industry: BlackRock, other investment firms 'killing the dream' of home ownership, journalist says

 

Don't waste any tears on these fat cat corps when the housing market corrects significantly. They took the risks, made their decisions, and it went South on them. Their partners and senior executives will still be playing on the same golf courses, and dining at the same private clubs, as they were before the housing market downturn. Now maybe some of the young couples looking for a starter home might have a chance. That's a big part of the American Dream, you know. And these big funds who pushed their way into the single-family homes market really squeezed many of the young couples out.

When it comes to getting jobs, growing a business, and some other things, today's youth have it easier than Generation X. But when it comes to buying their first house, it is much more difficult for today's youth than for Generation X or the Boomers.

 

There are people and forces out there who do not like the idea of common American people owning their own property.

 

Chop
Thanks for this information.

 

how can anyone not look at this graph and cry/cringe? And while i mostly blame Dem's for this, the GOP is also a significant culprit in this. I generally like Lindsey Graham but this weekend he was on Fox and lamenting what he believes is inadequate defense spending. He is Wrong. We need to tame the deficit even by cutting back some on defense spending. And we don't need to enact tax cuts until after we have this beast headed the right direction.

He's right that we need to worry about China's arsenal but the way we deal that blow is not by outspending them in defense it is by taking away all the billions we send them via commercial purchases. We need to stop bankrolling their defense budget.