Grace.
Yes you are right of course, there are simply too many "idiots" on this board - myself included - who are ignoramuses when it comes to history.
((Historically RE rises in price when interest rates fall.))
But don't you think that the "reasons" for interest rates falling are key to this analysis? Do you think it "matters" if interest rates fall (and asset prices rise) when money supply is stable, or if interest rates fall (and asset prices rise) because there is an explosion in credit growth???
Put another way, does it matter if interest rates fall:
1) As a consequence of "massive" credit growth that distorts the cost of credit, such that there is the "illusion" that the cost of money is exceptionally low, if not free, and if as a result asset prices are distorted because the lack of "real" returns on savings encourage holders of financial assets to speculate so as to obtain a real return on their capital, or
2) In a stable monetary environment, where the "real" cost of money is not artificially depressed, and prices in an asset class rise because of increased scarcity of the asset class relative to the rest of the economy.
((Historically RE rises in price when interest rates fall. This occurred even before there was a Fed to set short term rates or make permanent passes.))
Well, manipulation of the money supply certainly didn't begin with the Fed ... although, they would seem to have perfected the art. Hmm, and you note that the phenomenon has been around since at least the time of Adam Smith. Hmm, and when was the Bank of England founded??? :)
Regarding the above, I love the following introduction to Chapter 9 of G Edward Griffin's The Creature from Jekyll Island ... "The condensed history of fractional reserve banking; the unbroken record of fraud, booms, busts, and economic chaos; the formation of the Bank of England, the world's first central bank, which then became the model for the Federal Reserve System."
That says it all really.
Then again, I'm probably as much of a dullard when it comes to economics as I am about history, so perhaps ahah could make an appearance again on this forum and set me straight on these matters. However, he is SO brilliant, I probably won't be able to even BEGIN to comprehend his insightful analysis.
Best wishes,
Glenn |
