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House prices have created a ‘lost generation’
Topic Started: 27 Oct 2014, 02:20 PM (3,705 Views)
b_b
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Veritas
27 Oct 2014, 07:33 PM
MMT alert!!!!!

Any minute now B_B or Peter Fraser is going to tell us that nation state's that control their own currency cant go broke.

They can just print those deficits away don't you know.

:re:
Your getting close. Maybe a bit more research beyond one old post from krugman.... :lol
(S – I) + (T - G) + (M - X) = 0
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Veritas
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b_b
27 Oct 2014, 07:49 PM
Your getting close. Maybe a bit more research beyond one old post from krugman.... :lol
I've done my research.

If you or anyone else think that countries can just print away billions in debt and deficit without having to worry about currency debasement, then I have a handful of beans to sell you.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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Emmanuel
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Veritas
27 Oct 2014, 07:54 PM
I've done my research.

If you or anyone else think that countries can just print away billions in debt and deficit without having to worry about currency debasement, then I have a handful of beans to sell you.
You need to pay closer attention. Deficits put money into your hands and mine. Also, the lower the deficit, the higher the private debt.

MMT is descriptive, not prescriptive. BB knows that and you cannot understand it. The whole idea about deficits is a political thing, you know.
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peter fraser
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Veritas
27 Oct 2014, 07:54 PM
I've done my research.

If you or anyone else think that countries can just print away billions in debt and deficit without having to worry about currency debasement, then I have a handful of beans to sell you.
This is a thread on house prices, why not start another on questioning MMT if that is what you want to do.

Any expressed market opinion is my own and is not to be taken as financial advice
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herbie
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Three lost generations even if the bulls get their way even maybe?

What a waste of just so many increases in productivity over so many years - To just pour it all into more debt and higher housing prices - But there we have it maybe? We're just not especially smart maybe?
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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b_b
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Veritas
27 Oct 2014, 07:54 PM
I've done my research.

If you or anyone else think that countries can just print away billions in debt and deficit without having to worry about currency debasement, then I have a handful of beans to sell you.
So you accept this issue is not about financial sustainability. It is about the availability of real resources relative to currency (generally defined as inflation). Well done. You sound like an MMTer!!!

Now can we end this nonsense about ratings downgrades etc...
Edited by b_b, 27 Oct 2014, 09:06 PM.
(S – I) + (T - G) + (M - X) = 0
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If interest rates rise, property will tank. Demand is only being held up because money has never been cheaper.

So interest rates are the million dollar question. What could cause them to rise?

An outbreak of economic confidence and activity? Hard to imagine given the state of commodity prices and the rest of the world.

Inflation as a result of a lower dollar? Possible but historically the RBA has tended to "look through" this issue at the upper end of the inflation band if the underlying economy is looking a bit sick.

Black swan event? Always possible but hard to plan for and planning for Armageddon has only been a wealth destroyer to date.

The main driver (among others such as double income families) over the last twenty years for increasing property prices has been the overall reduction in interest rates since deregulation and floating the dollar. Can this continue?

Actually I think it can. As the mining investment boom continues to fade IRs will have to be kept low / lower to keep the economy going. Rates at their current lows are not enough to get businesses investing so they will likely have to go lower despite jawboning over asset prices. The lower dollar allows it too.

So FWIW I expect more of the same - high and increasing asset prices accompanied by low yields in all investment classes just to maintain the status quo in the economy in the face of the continuing funk in the rest of the world. Without the mining boom, interest rates are the only lever left and we are one of the only countries left with the ability to keep dropping them further.

So the trend of the last twenty years will keep continuing - and if that's still not enough then there is always quantitative easing to keep things inflated.
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Emmanuel
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b_b
27 Oct 2014, 09:02 PM
So you accept this issue is not about financial sustainability. It is about the availability of real resources relative to currency (generally defined as inflation). Well done. You sound like an MMTer!!!

Now can we end this nonsense about ratings downgrades etc...
Yes. And Australia has the real resources relative to currency. MMT is correct and financial sustainability is kind of a non-sequitur.
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Chris
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Sydneyite
27 Oct 2014, 06:18 PM
Huh??? Canada and the UK have vey similar housing "systems" to ours, and very similar outcomes. The US is also the same, but due to a much more decentralised economy and population (due to being larger and more scaled), over-all houses are cheaper there - but if you look at the big/popular cities where demand outstrips supply they are just as expensive as Oz cities.

And Russia is just so completely different in so many respects it's not worth mentioning them....
Russia isn't that different, most nations aren't. If they wanted to adopt the same NG FI closed (relatively) unregulated banking system they could quite easily.

And I'm confused, either they are like australia or their not. You can't say the 'parts' of are because that is not the same thing at all.

And none of this answer my original question, why is this not the global framework for individual wealth creation??
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skamy
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Chris
28 Oct 2014, 02:47 AM
Russia isn't that different, most nations aren't. If they wanted to adopt the same NG FI closed (relatively) unregulated banking system they could quite easily.

And I'm confused, either they are like australia or their not. You can't say the 'parts' of are because that is not the same thing at all.

And none of this answer my original question, why is this not the global framework for individual wealth creation??
Property and real estate has and always will be the global framework for creating wealth


Quote:
 
“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.”
Andrew Carnegie – Scottish businessman and philanthropist
“Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy.”
-Marshall Field

“Don’t wait to buy land, buy land and wait.” ~Will Rogers

“The major fortunes in America have been made in land.” ~John D. Rockefeller
“The best investment on earth is earth.” ~Louis Glickman
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” ~Franklin D. Roosevelt“
“Buy land, they’re not making it anymore.” ~Mark Twain
“Find out where the people are going and buy the land before they get there.” ~William Penn Adair

“Owning a home is a keystone of wealth… both financial affluence and emotional security”.
-Suze Orman
“Real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security.”
-Russell Sage, American Financier and Politician
“It’s tangible, it’s solid, it’s beautiful. It’s artistic, from my standpoint, and I just love real estate.”
-Donald Trump
Real estate investing, even on a very small scale, remains a tried and true means of building an individual's cash flow and wealth.
Robert Kiyosaki
“He is not a full man who does not own a piece of land.”
-Hebrew Proverb
Now, one thing I tell everyone is learn about real estate. Repeat after me: real estate provides the highest returns, the greatest values and the least risk.

Armstrong Williams



Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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