Replies to post #327407 on Zeev's Turnips Patch-No Politics (ZEEV)

[Public Heel]

The current rate of inflation exceeds the
risk free rate of return by approximately 360 basis points.

That "approximately" should be "at least". I'd say more like 600, but, of course, it all depends on what you're buying. That's the heart of it, though... interest rates are too low, but only such rates can prop up the real estate market.

If the rates stay low, the Dollar tanks. If they are raised to protect the Dollar, or to entice foreigners to continue funding our government deficits, then real estate tanks.

[porter]

Wow, what a lenthy treatise. I'm winded reading it.<g>
Do you want to whisper in his ear that "correlation does NOT mean causation." And then there is the small issue of "scarcity" in real estate.

Five years ago I remember my wife looking at a kitchen and announcing: "This is perfect, honey, but can we hedge it."
I responded: "Granite and three standard deviations from the mean overwhelm me!"
I believe the granite won out.

A 25-30% drop in R.E. isn't the issue. The issue is from where will the decline begin? And what happens when the dollar soon begins to rise and catches everyone off-guard? How does one factor that in.

As an aside:

We are in Wave 5 of Super Cycle 3.

To quote Prechter: "Why this cycle is so stretched and slow I do not know."
Translation: "Why aren't we in a crash phase?"
Answer: His count is incorrect. Period.

Question: Ask your friend if the ultimate answer lies in the second derivative of money growth? He's a quant, no?

G'nite.