The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: ChanceIs who wrote (240718)	3/18/2010 11:49:33 AM
From: Perspective	Read Replies (4) of 306849

Inflation or deflation - how about repeat the 1940s? Massive government deficit spending, inflation, but bond yields pegged at zero, a flat stock market, and commodities that didn't take out 1920 highs. Maybe we're all hosed no matter what we do? Granted there were a TON of differences that could make it go either way here. We had little debt going into the period. We taxed the wealthy like crazy. Price controls and the realities of a war-time economy distorted pricing mechanisms everywhere. Stocks paid considerable dividends and traded at low valuations, which might have kept a floor underneath them that we don't have. And the 1930s deflation had played out, setting asset prices across the board at reasonable levels. And the U.S. was the alternative investment at the time. Now we've got China, India, Brazil, and Russia as the escapes. Keeping those caveats in mind, it doesn't look to me like there were soaring interest rates and collapsing bonds - that waited another twenty years. I also fail to see how anyone could have done all that well virtually anywhere in that environment. `BC

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