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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Bucky Katt who wrote (65992)	6/8/2007 6:37:05 PM
From: Metacomet	Respond to of 116555

Another variation on pricing at "what the market will bear". Demonstrated clearly in house price escalation driven as much by the availability of "cheap" financing as inherent value.

To: Bucky Katt who wrote (65992)	6/8/2007 10:05:41 PM
From: GST	Respond to of 116555

Real estate is sometimes referred to as a "postitional" good. Its value is a function of its social position. In the same city, two areas can be priced at vastly different levels -- good and bad areas if you will. The value of a "good" area is a function of who lives there -- and not everybody can live there. Same with university education. The value in going to Harvard is largely due to its social scarcity -- not everybody can go there. Gold is the same -- as are stocks. When there is excess "liquidity" and high concentrations of wealth, the price of positional goods skyrockets -- as we have seen. But it is more than a matter of money supply, as some might simplistically try to argue. Nor can you speak about a single nation state and its currency without reference to its global economic position. These are the two most common mistakes made on threads like the one I am posting on now.