All I can say is, "Wow!!!!" Has anybody seen this thread... http://www.elitetrader.com/vb/showthread.php?threadid=143310 It sure looks like Random.Capital's third alternative!
Well, I was not trying to guess the bottom. I wondered how RE would do relative to commodities in the next 10 years. If scenario develops according to Jim Rogers - we will see inflation and commodities boom in next 10 years. Say we use current time as departing point (US RE has corrected a bit, depending on location). Would RE rise as much as a basket of commodities? Or it is tapped out and is not a real inflationary hedge anymore? Not clear to me. Trying to put picture together.
I kind of agree with you. Nowadays, it appears that much of the extra "printed money" ends up in assets and not necessarily in commodities or wages, a la the Greenspan Housing Bubble. If interest rates stay low, which is very likely, where do you think the money will go? In Japan it went into the market and real estate. Where will it go the next time? That's the question. But what I was getting at is that Greenspan Housing Bubble was an inflation even though it was sector specific and not the typical wage-price spectacle that we're used to. I would arge that the bottom line is that all that extra money has to go somewhere and whereever it goes will create some kind of inflation...
I would argue that that is becomingly increasingly difficult to predict. Think about this: they pumped so much into the system that we had an almost unbroken bull market throughout the 90's. Of course, there was hell to pay later first in 2000 and now with the Subprime Crisis. But the bottom line is that noone believed in a ten year bull before the 90's. (Somebody can correct me if I'm wrong, but I don't think we had anything like that before...) In other words, business cycles ain't what they used to be... And think of Japan: ten years in the toilet.
Don't even try! Imagine trying to predict the price of oil in the last year or so. Talk about an unimaginable bubble. It's nothing but pure market madness. There's no one who can predict stuff like that. Even if they did, they'd be wrong about the next major market event! And nowadays you have programmed trading, hedge funds, derivatives, much more open markets, truly global investing and a host of other new paradigms. No one has a crystal ball to handle all of that...
Persistent inflation requires persistent credit growth. Arguing that inflation can last "forever" is equivalent to arguing that credit can grow "forever".
So, considering the article posted after you made this statement seems to be supporting this case, what exactly does it mean? Increased prices, yes, but increased prices that could be alleviated quickly because production could ramp up as quickly as new demand is created? Thanks everyone for all of your insight.
I agree it can't last forever as you can see from above. But it can last for a very long time a la 90's. And, again, the 90's was not inflation in the traditional sense...
Other than the occasional odd contraction, inflation is a one-way street. Since the creation of the Fed, the $USD has lost about 99% of it's value... which is why a candy bar used to be a nickel, now is .$89 (smaller size makes up for the rest)... or, when the WSJ came out, a copy was $.02... now, $2.50. Inflation will continue until we implode in a currency destruction collapse.
this is why i've thought for a year that the best outcome is stagflation. erode real wages and profits while tax revenues don't drop off the map. gonna be interesting to see how obama handles the next couple years.