Is the currently high US-unemployment rate more important to the US real-estate market and economy than the fear of future inflation?
With a slowing Chinese economy, some analysts believe global commodity prices may actually go down significantly over the next few years offsetting general pressures, if any, on price inflation.
The impact of increasing the money supply is nearly non-existent right now. That’s been the problem. The Fed has taken some action to spur the velocity of money and not just in high-frequency trading.
However, QE1, QE2, and QE3 have been criticized as too little, too late and concerning QE1 and QE2 at least, mostly wrongly targeted to Wall Street rather than Main Street.
Q: In the course of managing your own business, you talk to many of these real estate execs every day. What concerns surface when you’re talking with them?
A: Pent-up or postponed inflation was No. 2 in their list of domestic concerns in our survey (after job creation), and they talk about that.
Their worry is, once you have inflation, you’re going to see interest rates going up.
I heard someone say (at an industry conference) that a 1 percent interest rate increase would chew up 12 or 13 percent of a consumer’s (home) buying power.
Everybody sees this inflation monster coming because of the amount of debt out there, about the amount of money being printed.