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Maybe, but the fed exit strategy will be inflation not default would be my bet. Defaulting or causing people to default on debt is how we truely get another gre
by bfrog 6y ago
Maybe, but the fed exit strategy will be inflation not default would be my bet. Defaulting or causing people to default on debt is how we truely get another great depression. Inflating our way out, if controlled, might be ok. Maybe. It'll ruin the dollar as the world reserve though would be my thinking and many others. Not my idea here, just makes sense to me.
- JMTQp8lwXL 6y agoIf interest rates can't go any lower (and there isn't much room, unless we think negative yield mortgages are possible), and the Fed chooses to inflate the currency (which I concur, would be a most likely response, as the alternatives have far worse consequences), then the real value of homes will decline-- though the nominal dollar value could stay the same.
- RestlessMind 6y ago> and there isn't much room, unless we think negative yield mortgages are possible Negative mortgage rates are of course possible - they happened in Denmark, for example: https://www.cnbc.com/2019/08/12/danish-bank-is-offering-10-year-mortgages-with-negative-interest-rates.html https://www.cnbc.com/2019/08/12/danish-bank-is-offering-10-y...
- JMTQp8lwXL 6y agoTo clarify, negative after fees. The Danish mortgages are not negative after fees. The question is, could we cross that line? Then the bank wouldn't be making any money on the loan.