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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Perspective who wrote (258207)7/2/2010 5:13:17 PM
From: THRead Replies (2) of 306849
 
brother bc,

<Inflation will only happen in the assets that are purchased by marginal dollars created by the Fed>

I've never thought that is how the inflation endgame of our Keynesian mad printing would end.

We will get inflation and deflation and the banks and reserves don't have much to do with the real endgame of our madness.

Inflation will happen on raw materials and all goods imported after foreign lenders refuse to continue funding our Treasuries and the Dollar either officially or de facto loses it's reserve currency status. Both events will happen relatively close in time together and much faster than many expect.

After that happens, raw materials and the "value/labor" to work those into goods exported to the US will increase in cost rather dramatically. Even domestic raw materials in abundant supply will increase if they have global markets.

What I do not know is how strong the inflation impact will be for things like real estate and US labor. There is a real serious fundamental problem with US labor costs as we become "globalized". The Fed's ability to, <change the measuring stick> fails this time, as labor will have no pricing power in the market.

Housing in highly desirable markets will attract a bid from foreign investors. Perhaps one of the reasons that coastal areas in California are doing better than many other markets.

In the end, we earn less and the things we need cost more. What the banks do or not do with the reserves will not change the final outcome. Our government debt load is not serviceable. That is the real driver and there is no solution possible, for no one will really cut the spending and entitlements in any meaningful way.

All IMO, and no one knows the real final outcome. I do have very high confidence that the American standard of living will decline.

GT
TH
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