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> I know the common refrain with this inflation is that it's temporary due to COVID Public figure's also don't want to yell fire in a crowded theater. Because

by rkk3 5y ago

> I know the common refrain with this inflation is that it's temporary due to COVID Public figure's also don't want to yell fire in a crowded theater. Because that can directly feed whichever economic bogey-man people are worried about. > In my humble opinion, I expect to see CPI start reflecting cost increases throughout the economy over the next 12-18 months. The data is already there if you look. https://twitter.com/BillAckman/status/1469438747292880898 https://twitter.com/BillAckman/status/1469438747292880898

rstuart4133 5y ago
Quoting: "The largest owners of nationwide single family rentals are reporting 17% YoY rent increases." Yep, that pretty much what you would expect. Governments (everywhere) money into the economy to reduce the impact of COVID. Because of COVID there was literally stuff all to spend it on and interest rates are at record lows, so what followed (at least here in Australia) was relators called a property boom, which to some us looked remarkably like a property bubble. Record house prices, paid for with money gifted by the government leading to record leveraging of incomes. What could possibly go wrong? Those record repayments have to be paid for somehow - and governments have pulled the interest rate lever so hard it's maxed out - they can't relieve the pressure this time by lowering them like they have so many times in the recent past. So rents must go up, but maybe not a lot at first. Even so, rents going up will push inflation up, even if it just a little bit. Inflation will start pushing interest rates up, but with interest rates hovering around 1% at one point even one basis point is a near a 1% rise. So that will need a 1% rise in rents to cover it. Have few multiple basis points rises in a year, and it ain't hard to get to 17% YoY rise in rents. That will of course drive inflation up even further, which of course will drive up repayments and ultimately rents up again. It looks like a positive feed back loop which will end when interest rates get so high massive amounts of money move from property and stocks into cash deposits. But that's a long way off, so we are just at the start of it. Real estate prices may not actually drop in dollar terms, but inflation will force everything thing else up and so effects of the original COVID spending spree will be unwound. Not a big deal really, and certainly not worth the "western capitalist economy as we know it is dying" click bait headlines it will generate.

by rkk3 5y ago

rstuart4133 5y ago

Quoting: "The largest owners of nationwide single family rentals are reporting 17% YoY rent increases." Yep, that pretty much what you would expect. Governments (everywhere) money into the economy to reduce the impact of COVID. Because of COVID there was literally stuff all to spend it on and interest rates are at record lows, so what followed (at least here in Australia) was relators called a property boom, which to some us looked remarkably like a property bubble. Record house prices, paid for with money gifted by the government leading to record leveraging of incomes. What could possibly go wrong? Those record repayments have to be paid for somehow - and governments have pulled the interest rate lever so hard it's maxed out - they can't relieve the pressure this time by lowering them like they have so many times in the recent past. So rents must go up, but maybe not a lot at first. Even so, rents going up will push inflation up, even if it just a little bit. Inflation will start pushing interest rates up, but with interest rates hovering around 1% at one point even one basis point is a near a 1% rise. So that will need a 1% rise in rents to cover it. Have few multiple basis points rises in a year, and it ain't hard to get to 17% YoY rise in rents. That will of course drive inflation up even further, which of course will drive up repayments and ultimately rents up again. It looks like a positive feed back loop which will end when interest rates get so high massive amounts of money move from property and stocks into cash deposits. But that's a long way off, so we are just at the start of it. Real estate prices may not actually drop in dollar terms, but inflation will force everything thing else up and so effects of the original COVID spending spree will be unwound. Not a big deal really, and certainly not worth the "western capitalist economy as we know it is dying" click bait headlines it will generate.