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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: damainman who wrote (25466)	11/28/2004 10:07:09 PM
From: GraceZ	Read Replies (1) \| Respond to of 306849

Is your house a home or an investment?

To: damainman who wrote (25466)	11/28/2004 10:47:14 PM
From: Amy J	Respond to of 306849

Devaluation of the dollar, inflation could erode the bond bucket of savings. Meanwhile, rents possibly would increase with inflation. There are experts on this thread that certainly would know what is best in this situation, but maybe one ideal scenario (sarcasm on) would be to go out and buy the most expensive house one could possibly get ($10M house on $30,000 salary, according to one poster I believe) but with a fixed rate interest and maybe watch inflation burn the loan down to nothing. Meanwhile, watch your savings burn down to nothing too as inflation erodes that too. So, why bother saving at all, why not increase debt levels? (Sarcasm off) I suppose one option would be to pay off a mortgage early if a person doesn't have a fixed rate mortgage. I would suspect rents will increase with inflation. Mercury News has an article in today's newspaper with the following quote: "The savings rate in China is more than 40 percent," the deputy head of the Chinese central bank recently told the Financial Times. "In the U.S. it is less than 2 percent. So, the problem is that they spend too much and save too little." What a bunch of morons we most certainly must look like to the rest of the world. Many of the savers in this country must be thinking, how can I get my money converted to Yuan. 2% is ridiculously low. People have rushed out to buy mortgages way over their heads, and so far that's worked out for many (which I'm glad), however, if interest rates rise in the face of deficits, the debtors will have more to gain by leaving the keys in the door of their house and walking away. If there's a govt bailout of these mortgage firms (or those buying up the mortgage bonds), it's definitely a strong message telling all Americans who actually do save money to go elsewhere with your money and park it in either the Yuan (restrictions apply), Yen, Euro or the Rupee (though their debt level is as lousy as ours - which is typical of a democracy - they never know how to say "no" to spending.) These are 45 year interest rate lows, so why would a buyer assume it'll always be this low, forever. Time to prepare for further dollar devaluation. There are only incentives for consumers to spend. There are virtually no incentives for consumers to save. And our system fully encourages us to be morons by not saving money. If people are only saving 2%, who do they expect will pay their retirements later in life? Oh, that's right, there's always fica that could be raised to 25%. Regards, Amy J