Money Relationships

What do you think is there any relationship between Real estate woes being price, trouble getting a Mortgage, gas prices and the American dollar being worth so little?

[quote]pittbulll wrote:
What do you think is there any relationship between Real estate woes being price, trouble getting a Mortgage, gas prices and the American dollar being worth so little?[/quote]

What? Your post is pretty difficult to understand. But no, I don’t think the dollar has much to do with real estate right now. If you were trying to buy Italian real estate maybe, but the builders are using the same dollar you are and are selling homes at a price the market can afford according to the local currency.

The trouble for most people is shitty credit. Right now is an excellent time to buy real estate and any other investment. When the economy cycles back up, you will be sitting on a piece of property worth much more than you paid for it.

Not to be a thread killer but I can save you a lot of trouble and three pages of name calling.

One side thinks its all a conspiracy by the moneyed elite to reduce the human population and turn America into a crippled police state.

The other side thinks its just part of the “cycle of life” and that Hillary/Guiliani/Romney would totally turn it around and make it all better.

You could even trow in the price of gold

What do you think; do you deny that the value of our currency has no effect on these subjects?

[quote]storey420 wrote:
Not to be a thread killer but I can save you a lot of trouble and three pages of name calling.

One side thinks its all a conspiracy by the moneyed elite to reduce the human population and turn America into a crippled police state.

The other side thinks its just part of the “cycle of life” and that Hillary/Guiliani/Romney would totally turn it around and make it all better.[/quote]

[quote]texasguy2 wrote:
pittbulll wrote:
What do you think is there any relationship between Real estate woes being price, trouble getting a Mortgage, gas prices and the American dollar being worth so little?

What? Your post is pretty difficult to understand. But no, I don’t think the dollar has much to do with real estate right now. If you were trying to buy Italian real estate maybe, but the builders are using the same dollar you are and are selling homes at a price the market can afford according to the local currency.

The trouble for most people is shitty credit. Right now is an excellent time to buy real estate and any other investment. When the economy cycles back up, you will be sitting on a piece of property worth much more than you paid for it.

[/quote]

The Builders are mostly using their money, but most people have to barrow money to buy a house. I believe the market would be more favorable to loan money on a house in Italy. If you were a foreign investor and you thought the value of the dollar would rebound in short order it would be an excellent investment.

Yes. The bad loans are coming home to roost. The Fed is messing with the money supply so banks don’t go belly up for making bad loans. This causes the dollar to deflate and makes oil cost more. There is no debate that this is real.

The only debate is what, if anything is to be done about it.

[quote]Zap Branigan wrote:
Yes. The bad loans are coming home to roost. The Fed is messing with the money supply so banks don’t go belly up for making bad loans. This causes the dollar to deflate and makes oil cost more. There is no debate that this is real.

The only debate is what, if anything is to be done about it.[/quote]

Do you think the devaluation of the dollar is related to the printing of more currency?

[quote]pittbulll wrote:
What do you think is there any relationship between Real estate woes being price, trouble getting a Mortgage, gas prices and the American dollar being worth so little?[/quote]

These are all related. The Fed tinkers with rates and that has led to inflation of the money supply over the last 95 years. The price of gold is only relevant because people use it as a hedge against inflation. Its price rises with demand.

The most recent housing bubble was caused by artificially low interest rates set by the Fed. When investors quit investing in housing because of the cost of production the Fed raised rates to slow down consumption. This ultimately popped the bubble when people started defaulting on their loans because their rates were adjusted “too high”.

Whenever the rates are artificially lowered the money supply needs to be increased to make up for an artificially increased demand in credit. This always causes inflation due to the fractional nature of banks. The trouble with price inflation is that it does not happen instantly or at a constant rate. Certain sectors are affected first and it ripples out in order of the factors of production. Bankers and brokers always get the new money first so they benefit from the transfer of wealth. Generally speaking, it is the higher order producers that benefit while consumers suffer. The faster new money is spent the greater the benefit.

The main argument that we will see is whether a completely free market economy is more desirable than central planning of the economy. The pro-planner argument is that the rate of money flow and the supply is what affects economic growth. This is a flawed theory because it neglects the questions: Is growth necessary? What affects the flow of money? How does the money supply relate to prices?

In a completely free market economy with no central banking, economic growth is individualistic, set by our own time preference. People who can put off a present desire for consumption affect the money supply that is available to entrepreneurs via savings. But savings are directly related to one’s own income.

If I have more income than I need to consume I will save. In general, people do not save without having a specific reason to. The higher the savings rate the lower the interest banks can afford to lend at. The opposite is also true. In a free market economy people would have a greater incentive to save because interest rates would be higher. But growth isn’t necessary for a healthy economy nor is saving…it’s a matter of personal preference and ability. All we really need is a stable currency and the rest will take care of itself.

[quote]LIFTICVSMAXIMVS wrote:
pittbulll wrote:
What do you think is there any relationship between Real estate woes being price, trouble getting a Mortgage, gas prices and the American dollar being worth so little?

These are all related. The Fed tinkers with rates and that has led to inflation of the money supply over the last 95 years. The price of gold is only relevant because people use it as a hedge against inflation. Its price rises with demand.

The most recent housing bubble was caused by artificially low interest rates set by the Fed. When investors quit investing in housing because of the cost of production the Fed raised rates to slow down consumption. This ultimately popped the bubble when people started defaulting on their loans because their rates were adjusted “too high”.

Whenever the rates are artificially lowered the money supply needs to be increased to make up for an artificially increased demand in credit. This always causes inflation due to the fractional nature of banks. The trouble with price inflation is that it does not happen instantly or at a constant rate. Certain sectors are affected first and it ripples out in order of the factors of production. Bankers and brokers always get the new money first so they benefit from the transfer of wealth. Generally speaking, it is the higher order producers that benefit while consumers suffer. The faster new money is spent the greater the benefit.

The main argument that we will see is whether a completely free market economy is more desirable than central planning of the economy. The pro-planner argument is that the rate of money flow and the supply is what affects economic growth. This is a flawed theory because it neglects the questions: Is growth necessary? What affects the flow of money? How does the money supply relate to prices?

In a completely free market economy with no central banking, economic growth is individualistic, set by our own time preference. People who can put off a present desire for consumption affect the money supply that is available to entrepreneurs via savings. But savings are directly related to one’s own income.

If I have more income than I need to consume I will save. In general, people do not save without having a specific reason to. The higher the savings rate the lower the interest banks can afford to lend at. The opposite is also true. In a free market economy people would have a greater incentive to save because interest rates would be higher. But growth isn’t necessary for a healthy economy nor is saving…it’s a matter of personal preference and ability. All we really need is a stable currency and the rest will take care of itself.[/quote]

We both know they�??re releasing more currency into our economy but do you know how or where they insert this cash?

[quote]pittbulll wrote:
We both know they�??re releasing more currency into our economy but do you know how or where they insert this cash?
[/quote]

The Fed doesn’t literally inject money into the economy it stands in as a reserve to banks or it loans it to the treasury. A bank is only required to keep 10% of all liabilities on hand. That means for every $10 held they can effectively have $100 loaned out. This is fractional reserve banking which is inflation.

When the government spends money it does not have the Fed simply loans it to them which must be paid back plus interest. The national debt becomes part of the new total money supply.

[quote]LIFTICVSMAXIMVS wrote:
pittbulll wrote:
We both know they�??re releasing more currency into our economy but do you know how or where they insert this cash?

The Fed doesn’t literally inject money into the economy it stands in as a reserve to banks or it loans it to the treasury. A bank is only required to keep 10% of all liabilities on hand. That means for every $10 held they can effectively have $100 loaned out. This is fractional reserve banking which is inflation.

When the government spends money it does not have the Fed simply loans it to them which must be paid back plus interest. The national debt becomes part of the new total money supply.[/quote]

Do you mean like Iraq ?

[quote]pittbulll wrote:
Do you mean like Iraq ?
[/quote]

Like WWI, WWII, Korea, Vietnam…and yes, even Iraq.

[quote]LIFTICVSMAXIMVS wrote:
pittbulll wrote:
Do you mean like Iraq ?

Like WWI, WWII, Korea, Vietnam…and yes, even Iraq.[/quote]

I am almost positive WW1 was not funded that way am
And I am pretty sure WW2 was not either, Viet Nam probably was. I Googled it but could not nail down a year America quit the Gold Standard. I was thinking it was Lyndon Johnson

Thanks for the conversation

[quote]pittbulll wrote:

I am almost positive WW1 was not funded that way am
And I am pretty sure WW2 was not either…
[/quote]

And you would be wrong. Without fiat money pumped into them neither the UK nor France would have been able to hold out for more than a few months.

Gold standard from peak to crisis (1901�??1932)

[edit] Abandoning the standard to fund the war

The British government ended the convertibility of Bank of England notes to gold in 1914 to fund military operations during World War I. By the end of the war Britain was on a series of fiat currency regulations, which monetized Postal Money Orders and Treasury Notes. The government later called these notes banknotes, which are different from US Treasury notes. The United States government took similar measures. After the war, Germany, losing much of its gold in reparations, could no longer coin gold “Reichsmarks,” and moved to paper currency, although the Weimar Republic later introduced the “rentenmark,” and later the gold-backed reichsmark in an effort to control hyperinflation.

In the UK the pound was returned to the gold standard in 1925, by a somewhat reluctant Winston Churchill. Although a higher gold price and significant inflation had followed the WWI ending of the gold standard, Churchill returned to the standard at the pre-war gold price. For five years prior to 1925 the gold price was managed downward to the pre-war level, causing deflation throughout those countries using the Pound Sterling. This deflation reached across the remnants of the British Empire everywhere the Pound Sterling was still used as the primary unit of account. The British government abandoned the standard again on September 20, 1931. Sweden abandoned the gold standard in October 1931, the U.S. in 1933, and other nations were, to one degree or another, forced off the gold standard.

No fiat currency, no massive socialist undertakings, that includes wars.

[quote]pittbulll wrote:
LIFTICVSMAXIMVS wrote:
pittbulll wrote:
Do you mean like Iraq ?

Like WWI, WWII, Korea, Vietnam…and yes, even Iraq.

I am almost positive WW1 was not funded that way am
And I am pretty sure WW2 was not either, Viet Nam probably was. I Googled it but could not nail down a year America quit the Gold Standard. I was thinking it was Lyndon Johnson
[/quote]

It went in stages. In 1971 the Bretton Woods Agreement broke down under Nixon when gold payments were stopped.

[quote]pittbulll wrote:
Zap Branigan wrote:
Yes. The bad loans are coming home to roost. The Fed is messing with the money supply so banks don’t go belly up for making bad loans. This causes the dollar to deflate and makes oil cost more. There is no debate that this is real.

The only debate is what, if anything is to be done about it.

Do you think the devaluation of the dollar is related to the printing of more currency?[/quote]

Absolutely.

[center]Fed Up
by Alvaro Vargas Llosa[/center]

WASHINGTON–Recently, The Washington Post carried a front-page story about a federal raid on the headquarters of the National Organization for the Repeal of the Federal Reserve Act and Internal Revenue Code (Norfed). The Indiana-based company, which advocates “sound money,” has been selling coins and paper certificates backed by gold and silver for years, in effect trying to compete with the dollar…"

http://www.tnr.com/politics/story.html?id=eb4e90b4-c60d-49cd-b16b-9dad23fea33e

I am guessing they were going to commit fraud rather than compete with the U.S. economy