Heinz Blasnik- Views You Can Use Message Board

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Strategies & Market Trends : Heinz Blasnik- Views You Can Use

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To: GraceZ who wrote (2678)	6/25/2003 10:39:57 PM
From: patron_anejo_por_favor	Read Replies (1) of 4905

<<The big difference though, is in what happens after that money leaves them. For the most part mortgage lending is a deadend, its chained to the housing market, there's very little that gets multiplied in the economy except housing prices and a bunch of mortgage agents get fat.>> This is the essence of why the current emphasis (by the Fed) on channeling money creation into residential real estate is insane...it ensures that larger and larger flows are required just to maintain housing prices and valuations, even as the velocity of the newly created money diminishes. A monetary dead-end, as it were. It is not much different from other forms of consumption in that respect WITH the exception that it represents a long term commitment of capital flows by individuals for many, many years to come. That's why we won't see significant GDP growth for years to come (at least without humongous budget and trade deficits to "create" GDP). C&I lending remains the tell...it is the most potent indicator of deflation out there.

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