It's arguable that the reason the US has printed money is not to inflate prices but reduce the value of debt. If it is contractually obliged to repay debts, then it is easier to do so in devalued $, rather than default. Also, with their obligations associated with Medicare and Social Security and boomers all cashing out about $44 trillion in investments over the next decade and a bit, it may be a bit unrealistic to believe the next generation will pay for that all. "You want to transfer my wealth (i.e. raise taxes) to you so you can live comfortably? Sorry pops!" Be interesting with the benefit of hindsight if we are here in 10 years looking back to see how things panned-out. Zargor
That is still treating the symptom and not the disease. The US economy is built on consumers. Over the past decade, the home has been the biggest source of equity allowing consumers to draw on that equity to purchase more cars, more boats, more stuff which has kept the economy growing. When you have property prices drop 50%, that is 50% of equity the consumer previously enjoyed borrowing against wiped out. So now consumers can't afford to buy stuff anymore you see the US economy tanking with no way out. Monetizing saves the rich from the toxic assets because it clears the bank's books up. I agree with you that it also saves the US having to pay 'real' value on it's obligations as $44T in 2008 money might be worth $1T in 10yrs time in real terms. That is a good point. It is a strategy to only save the rich from collapse. It does nothing for average Joe because whilst the Govt takes control of the toxic debt to help the banks, average Joe is still burdened with having to pay that debt on a house worth 50% of it's mortgage value. The US Consumer will be out of action for a decade until they can pay the debt down OR until the US Fed finally prints enough money to reflate asset prices.
Agree with you 100% there!. I guess it really comes down to who's "will" will win-out - the politicos or the central bank? Zargor
Only while it suits them. When push comes to shove, self-interest wins-out and the 2 have different core agendas. Zargor
In my opinion commercial property would be the absolute worst investment to get into at the moment and I cant see any reason for that to change for a while. Property has already started it's cyclical decline and the amount of empty shops and factories is rising by the week in the areas I frequent. I can see sense in buying residential RE at the bottom of the cycle because people still need a place to live but I don't see any point in buying commercial at a time when business confidence is low. It's no good having a potentially high yeild but no tenant. C
If it was me running the show, this is what i would do: All bailouts go to the banks and super rich. Bail every bastard out, it matters not because you never intend on paying back the debt. Give nothing to Average Joe. Let them default on property, the more the better. Buy those defaults from the banks or bail the banks out and keep it on the books. The objective of this is to transfer as much property as possible to the Govt, banks, wealthy. Essentially a land grab. Why do this? Because when the USD dies and they need to create a new currency, the Govt would want to make damn sure either they, the banks or the wealthy own the land. This way, you can sell it back to 'peasant Joe' with the new currency and hey presto, you are back in business Thank God no one in a position of power thinks like me.......
All paper goes to the banks. Even if the Bailout Money was given instead to the banks if each citizen were to receive $5k or $50k, that money will go to the bank eventually. Thats how it is designed. The Bankers have bought the World at the flick of pens within around 3 Centuries of existance. For as long as money can be created or printed and 'assigned' like what they have done with Dollars, Euros, Pesos, Rupiahs, etc this will keep happening. The world needs to return to 'commodity' money with INTRINSIC value ( gold, silver, wheat, corn, rice, etc ) or if they INTRODUCE paper cheques instead than the banker MUST BE FORBIDDEN to issue ONE IOTA more than what he has in physical backing. Sure commerce wont be as easy as it has been in the last 20 years, but WE WONT BE ENSLAVED IN DEBT EITHER.
But it's not the same thing with a major key difference. Money directly to banks = ownership of land by banks and not by average Joe. Money to average Joe = ownership of land by the people, not by banks. No matter how you slice it, if your currency and economy were on the edge of the abyss you would not want the people owning the land. Fiat is worthless but land is real wealth. This is why he bailouts in the US have been only for the banks/rich and not for us peasants. THEY want to own the land. That is 101 Overlord handbook stuff.
