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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: patron_anejo_por_favor who wrote (5945)10/10/2002 2:28:03 AM
From: ConanRead Replies (2) of 306849
 
After reading the conversations here about interest rates I checked how my tax exempt Money Market Mutual Fund was doing. Turns out the interest rate I've been getting lately was only 0.33%! That is comparable to stuffing the cash in a mattress. I found a 3 month CD at 1.75% and am moving the cash there fast.

I think with Fed funds at 1.75% and the yield on 30 YR and 10 YR Treasurys dropping fast that deflation or no inflation is clearly taking hold. This is a bit unsettling when mortgages are still around 6% for a conventional loan. Although I like the benefits of leverage I am really looking hard at keeping my debt low. Haven't kept a balance on a credit card in years and I just paid off my second on my house a few months ago. Seems like paying off debt is the best use of cash these days with the DOW heading to under 7000.

You have to wonder if at some point we will start to see some deflation in asset prices -- assets like homes. I think it will take a while but we could be heading that way. But more likely is that home prices will plateau while interest rates continue to fall. Seems like the global economy is the main driver of all this deflation in prices now and maybe wages and homes in the future.

Conan
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