Actually, the dollar was much less stable under the gold standard. Those wild swings prior to 1971 ruined a lot of businesses, individuals and families.
Posted on 10/26/2006 12:53:25 PM PDT by GodGunsGuts
The price of existing homes last month fell 2.2 percent, the largest monthly decline in the almost four decades the number has been tracked, according to an industry report released yesterday.
Nationwide, the number of existing single-family homes sold fell 14.2 percent in September compared with September 2005, according to the report from the National Association of Realtors. The number of sales has fallen each month since March.
Prices fell everywhere in the country, with the Northeast and West most affected. Declines were more moderate in the South, which includes the Washington area....
(Excerpt) Read more at washingtonpost.com ...
Actually, the dollar was much less stable under the gold standard. Those wild swings prior to 1971 ruined a lot of businesses, individuals and families.
Since the US went off the gold standard, every year, we've had inflation, and no corresponding periods of deflation, so the dollar has, although in a much more stable way, lost value every single year. This brings up two points.
First, the constant inflation plays directly into the hands of the liberal left, as it creates a built in tax increase every year because of bracket creep.
Second, a larger question is, is the current rate of inflation every year, with never a correcting deflationary cycle a natural trend, or is it the result of monetary market manipulation. There are two schools of thought. One is that the economy is like a ship, and without a monetary policy, the economy is like a ship with no one at the wheel, subject to crashing on rocks, capsizing, etc. The second theory is that economies are natural forces, and you can hold them back for a while, but eventually, the reality of the amount of goods available with respect to the number of dollars chasing them will come back to reality, and that the longer you hold back the natural forces, the more violent the correction will be.
As I stated in the post you replied to, I am no economist, and have no idea how this will play out. Your chart is good information, though, and brings to light something I hadn't considered. Thanks for posting it.
Well maybe, but why do you want so much dialogue about the same subject going on for several weeks right before the election? What was the purpose of this thread we're on right now? Haven't we already covered every issue discussed on this thread at least a few times in your last five threads about real estate? Your posts are spaced a few days apart but why do you want so much repetitive discussion of the same subject? That's what makes you look like possibly a DNC operative.
Yes, apparently to some here consistently falling prices would be good for everyone...... except businesses that produce goods and offer services. Other than them, it would be great. Of course, without any jobs no one would be able to afford anything anyway. Yup, let's bring back that gold standard right away. For our children!
I don't understand what the problem is with ARMs and interst only loans. People took out a lot of ARMs in 2004 because variable rates were very low back then. The big lenders like Countrywide, Home Savings, and Wells Fargo look ahead to where interest rates are likely to go and make sure people have enough income to handle upward adjustments in the future. There's nothing wrong with interest only loans for the first several years of a home purchase. They allow people to buy a bigger house and just pay if off more slowly. What do ARMs and interest only loans have to do with a "housing bubble"? These are just different kinds of financing methods.
In California and the Northeast, real estate is and has been overpriced for years. A correction is overdue.
This is the other thing I don't understand about you: If you are a Republican who votes party line then why are you posting so much negative material about the economy right before a key mid-term election? Why don't you hold off on this stuff until November 8? It doesn't make sense to post all this negative stuff now if you're actually a Republican. So what is the purpose of all these negative posts about real estate?
Why on earth would I remain in a nonproductive thread (in terms of reaching the masses) if my primary interest was to sour FReepers on Republicans? Please. And no, we have not covered *every* issue multiple times. I run into new people who teach me things I never knew almost every day. If you are tired of talking about real estate, you are free to move on to threads that are of more interest to you. As for me, I will stay in these threads and welcome all points of view (all the while offering my own) until I feel like I understand most every aspect of the real estate market/bubble.
Yes, except for all the businesses that were destroyed in between it was just fine. Do you think it's easier to attract investment in an environment experiencing wild swings of feast and famine or in one like we are experiencing today?
Since the US went off the gold standard, every year, we've had inflation, and no corresponding periods of deflation, so the dollar has, although in a much more stable way, lost value every single year
And we've become the richest nation in history with the worlds largest and most vibrant economy.
Inflation since 1981 has averaged about 2% a year. I'd say the Fed has been doing a pretty good job over the past 25 years. All one needs to do is look at our GDP growth, the number of people we employ, rising incomes, increased household wealth and the amount of capital pouring into our economy for proof.
Deflation is much worse for lots of reasons. I'd much rather have 2% inflation than deflation of any sort.
I don't operate that way. While I get behind the best candidates available, I never stop talking about what I think the Republican Party should be, and this is especially the case around election time. I think our current economic policy is anything but conservative and is a disaster in the making. The problem is the demoratic alternative will be even worse. Whereas Bush and our Republican Congress lower taxes while increasing spending, the demorats will raise taxes and spend even more. We need to put pressure on Republicans to get back to their core principles, which includes fiscal conservatism. This becomes especially the case during an election cycle IMO.
Do you ever envision any end to inflation, dollar depreciation/devaluation, or does do you see it just going forever?
This problem was solved while Reagan was in office. Brackets and exemptions are adjusted for inflation every year.
Second, a larger question is, is the current rate of inflation every year, with never a correcting deflationary cycle a natural trend,
If GDP grows 3% per year and money supply grows 5% per year, inflation should be the difference, 2%. The only problem is you don't know ahead of time what GDP growth will be and you can't accurately target the money supply.
If you miscalculate and add too little to the money supply, you get deflation. Japan had deflation since 1989 and it caused lots of problems. People delayed purchases, they knew goods would be cheaper next year. To stimulate the economy, they ran huge budget deficits. That didn't work and now they are stuck with a much larger debt than ours. It's safer to target a reasonable (1.5%-2%, IIRC) annual inflation rate. As long as it's consistent and low, people can adjust accordingly. It's much harder to adjust to deflation. And much more painful.
321 "there were certainly more wild swings, there were periods of deflation and inflation."
Most people would not describe years of double digit inflation followed by years of double digit deflation as being "very stable". Even the idea that it "would average out to a very flat line of total inflation from 1850-1970" is goofy. In the first place, it's a flat line only if you ignore the points in-between. In the second place, it's not even a level line unless you very carefully pick some day in history with the same gold price as some particular hand-picked day a century later.
This kind of data distortion would only be useful for fooling oneself or for defrauding a prospective gold buyer --which imho is a lot worse than being "slightly deceptive"..
Sure. As soon as the Feds can get their hands on one of these.
LOL! As the goldbugs will be happy to tell you, inflation occurs because the Fed is evil, not because of the difficulty in measuring GDP, projecting GDP growth and measuring and manipulating money supply.
If they really wanted 0% inflation, it'd be easy. LOL!
It would be easy if we were on the gold standard. We'd have 2% deflation every year and our economy would mirror Japan in the 90s. But at least we wouldn't have to worry about the evil Fed. Or jobs.
I posted his full paragraph to illustrate precisely what you did- you cut off his final sentence, which gave the impression that his definition of a bubble was the opposite of what it is. I figured this comment would suffice to embarrass even you, but then I underestimated your shamelessness or your wine:
"Who are you trying to kid? This is the sentence immediately following the selection you quoted.
"In this book, a bubble is an upward price movement over an extended range that then implodes. An extended negative bubble is a crash."
http://www.freerepublic.com/focus/f-news/1709271/posts?page=191#191
The full paragraph you elided from I posted here:
http://www.freerepublic.com/focus/f-news/1709271/posts?page=130#130
Cheers!
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