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All that printed money has to go somewhere though. So if it is taken out of housing, then either it will go to commodities, stocks or crypto. I got a feeling
by DethNinja 4y ago
All that printed money has to go somewhere though.
So if it is taken out of housing, then either it will go to commodities, stocks or crypto.
I got a feeling that rich people will keep investing on land, so I don’t think a housing market crash will happen but prices might drop a bit.
- alexpetralia 4y agoNo, money is created and destroyed all the time.
- JumpCrisscross 4y ago> that printed money has to go somewhere Money isn’t conserved in our system. When the Fed sells a bond, and it’s presently selling tens of billions, scheduled to increase to hundreds of billions, it destroys that money.
- lukas099 4y agoWon't less money will be 'printed' (i.e. created by banks via lending) as mortgages fall?
- imtringued 4y agoYes and all those existing mortgages have to be paid off which reduces the money supply. You actually have a system that ratchets itself back the moment people stop borrowing. The problem is that debt deflation causes the velocity of money to drop making it harder to pay off debt. The central bank is perpetually scared of debt deflation so it targets a 2% inflation rate. If you could implement a -2% negative interest rate you wouldn't need inflation targeting at all. Debt deflation wouldn't result in a stagnant economy with unemployment making it easier for governments run a balanced budget or short term austerity without ill sideffects.