Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Moominoid who wrote (62651)	4/25/2005 2:44:24 AM
From: Maurice Winn	Read Replies (1) of 74559

<Let's say suddenly everyone decides that Troy NY is the coolest place to live (Scorcese makes another movie here or something). House prices rise from $100k currently to $400k as out of towners swarm in and buy up the property. Former Troy homeowners become wealthier because they are overweight in their allocation of assets to Troy residential property. At a national level though all that has happened is some houses are now relatively more expensive compared to all goods services and assets in the economy. Therefore, this capital gain is inflation at the national level not real activity.> As an individual home owner in Troy, a person could be forgiven for calling "Yippee!" and ignoring some theoretical inflationary mumbo jumbo on a Green$pan level in the global economy. Maybe it's inflationary and economically neutral for the rest of the world, but to the Troy crowd, that doesn't matter a hoot. They become rich! Rich!! RICH!!! RICH!!! Aka wealthy. Wealth increases for them. Maybe the total wealth of the world hasn't changed, but it sure does locally. The rest of the world can worry about the inflation issue. The Troy people can bank the profits. Mqurice

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