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Assets are deflating at the moment though. S&P500 is down, property prices are down, etc. Asset prices are highly inversely correlated to interest rates, so for

Assets are deflating at the moment though. S&P500 is down, property prices are down, etc. Asset prices are highly inversely correlated to interest rates, so for a 'rich' person you are actually much better off without inflation, as interest rates are lower and asset prices rise faster.

robjan 4y ago
[deleted]
- ivalm 4y ago
  Even nominal profits are down, so not true.
- zhte415 4y ago
  The interest rate is the discount facter. Low asset prices may not be equivalently low.
  - giantg2 4y ago
    Unless you're rich and make a cash offer.
    - zhte415 4y ago
      Then you lose the opportunity cost. No difference.
      - giantg2 4y ago
        I think that's impossible to say without know what the other opportunities are, or what the person's strategy is.
- bko 4y ago
  Higher prices don't mean more profit. People adjust their behavior and retailers eat some of the costs of higher prices. They'll sell a lot less. Their revenue might not even go up necessarily
MrGilbert 4y ago
> "property prices are down, etc" Well, idk about your area, but property prices in northern Germany are still well above the 2020 mark.
- simonh 4y ago
  Top level comment was about the UK, and over here property prices are down. https://www.theguardian.com/commentisfree/2023/mar/05/house-prices-freefall-property-ownership-rent-britain#:~:text=Figures%20released%20last%20week%20showed,an%20average%20of%20%C2%A314%2C000 https://www.theguardian.com/commentisfree/2023/mar/05/house-....
  - atchoo 4y ago
    Nope. They went up this month. "UK house prices defy gloom with an average £3,000 rise" 20/03/2023 https://www.theguardian.com/money/2023/mar/20/uk-house-prices-defy-gloom-with-an-average-3000-rise https://www.theguardian.com/money/2023/mar/20/uk-house-price...
    - simonh 4y ago
      So they went down by £14,000 and then went up £3,000. So are still down.
  - fifticon 4y ago
    they "have" to be when interest rates are up, since it means the price of money (to borrow) is high. When money can be had for cheap (rates), prices balloon, and when rates are up, real estate prices will, relatively speaking, go down. Another way to put it is that RE prices are always viewed through the relative lens of current interest rates. Yet another way to put it is that it can be hard to figure out if they have objectively risen or fallen, because of the changed rates. UPDATE: I can see a comment below says they have gone up in some places. Well, when both rates AND prices have gone up, it is not hard to tell :-)
  - majormajor 4y ago
    Are they down YoY or compared to pre-Covid? The linked article doesn't seem to have that information concretely, but does include "The average British home now costs about nine times average earnings: one estimate I recently read reckoned that the last time UK houses were this expensive was in 1876." which suggests they're still higher by that measure than three years ago. So: correction of a super crazy time, but still a "win" for asset values for the owners over the last 4 years, or "overall trending down"?
benjaminwootton 4y ago
Not sure why you are being downvoted. Stock prices are on the slide and property prices and rental yields are extremely precarious. I also agree that low rates were good as you could invest in property with leverage and in businesses which could borrow and raise money to cheaply to grow. Nobody is having a good time right now.
- ROTMetro 4y ago
  Because only one class will come out of this with MORE assets that at some point will return back to their higher valuable. It's a completely facetious argument. Sure you lost your house, but think of how much the poor billionaire's paper value dropped (while the billionaires asset acquisition continued apace taking advantage of the firesale forced upon the lower classes).
  - benjaminwootton 4y ago
    It isn’t facetious. People with investments and assets have lost a stack as inflation has taken off and could be waiting for a long time to return to the peaks. On a long enough timeline I’m sure you are right, but this year and likely over the next few years nobody is winning.
    - 20after4 4y ago
      If a billionaire loses 90% of their net worth, they are still rich.
      - Invictus0 4y ago
        If a beggar doubles his money, he's still broke.
      - concordDance 4y ago
        This is not relevant to the comment you are replying to.
ROTMetro 4y ago
Inflation, asset deflation and a financially strained middle/low class causing them to be upside down on debt = firesale on what assets they had for the top class to acquire. I believe this cycles used to be called pump and suck when directed at third world economies, get them addicted to debt then acquire their desirable assets. Crazy to see it being used now on the UK and USA middle class. We never thought the banking leopard would eat our face.
- elevenoh4 4y ago
  Monetary policy cycles are for insiders to use information to make more $ it's emergent out of the incentives e.g. the Cantillion effect it wont be around forever with AGI making this so obvious
dangwhy 4y ago
> Asset prices are highly inversely correlated to interest rates I present you the US housing market.
- mellavora 4y ago
  I don't quite understand. Are you commenting on the much discussed U.S. Housing Prices Fall for First Time in a Decade" stories? https://time.com/6217372/us-housing-prices-fall/ https://time.com/6217372/us-housing-prices-fall/
  - dangwhy 4y ago
    that 'fall' is a joke. 0.44% ?
  - vinyl7 4y ago
    Down 0.44% after 100% increase over the last two years
kobalsky 4y ago
> Asset prices are highly inversely correlated to interest rates this is true in the short term because a lot of assets are held with borrowed money. when interest rates go up those assets get sold to cancel the debt and bring down the market value. however, either if inflation is sustained or interest rates go down, asset values will inevitably bounce back, but money will NEVER recover its value.
deleted 4y ago
[deleted]
TheFattestNinja 4y ago
Always worth remembering that, at least for property prices, "being down 10%" doesn't mean that 1y they were worth 100 and this year are worth 90, but that 2y ago they were worth 100, 1y ago they were worth 110, and this year they are worth 119. In other words we often talk about "the % year on year increase is down", not "the value of the house is down".
- wonnor 4y ago
  Can you point to a single usage in the context of property prices where "being down X%", without specifying that X is referring to a YoY increase, means what you say?
AviationAtom 4y ago
Folks feast like kings when the cheap money is flowing, failing to realize that eventually the tab comes due. It's what you're seeing happening in Silicon Valley right now. Usually a reality check occurs every decade or so, bringing heads back down to Earth, but I think too many felt that the COVID lockdown lows in the markets were that reset. They then went right back to their old habits, after a brief pause. Just thinking about how long it took to recover from 2000, 2008, etc., it's obvious that we didn't truly have that reset. The lockdowns fundamentally changed a lot, but few people seem to want to acknowledge it. The effects of the lockdowns will been seen for a long time, I honestly do believe. Just my take on it all.

robjan 4y ago

[deleted]

ivalm 4y ago
Even nominal profits are down, so not true.
zhte415 4y ago
The interest rate is the discount facter. Low asset prices may not be equivalently low.
- giantg2 4y ago
  Unless you're rich and make a cash offer.
  - zhte415 4y ago
    Then you lose the opportunity cost. No difference.
    - giantg2 4y ago
      I think that's impossible to say without know what the other opportunities are, or what the person's strategy is.
bko 4y ago
Higher prices don't mean more profit. People adjust their behavior and retailers eat some of the costs of higher prices. They'll sell a lot less. Their revenue might not even go up necessarily

MrGilbert 4y ago

> "property prices are down, etc" Well, idk about your area, but property prices in northern Germany are still well above the 2020 mark.

simonh 4y ago
Top level comment was about the UK, and over here property prices are down. https://www.theguardian.com/commentisfree/2023/mar/05/house-prices-freefall-property-ownership-rent-britain#:~:text=Figures%20released%20last%20week%20showed,an%20average%20of%20%C2%A314%2C000 https://www.theguardian.com/commentisfree/2023/mar/05/house-....
- atchoo 4y ago
  Nope. They went up this month. "UK house prices defy gloom with an average £3,000 rise" 20/03/2023 https://www.theguardian.com/money/2023/mar/20/uk-house-prices-defy-gloom-with-an-average-3000-rise https://www.theguardian.com/money/2023/mar/20/uk-house-price...
  - simonh 4y ago
    So they went down by £14,000 and then went up £3,000. So are still down.
- fifticon 4y ago
  they "have" to be when interest rates are up, since it means the price of money (to borrow) is high. When money can be had for cheap (rates), prices balloon, and when rates are up, real estate prices will, relatively speaking, go down. Another way to put it is that RE prices are always viewed through the relative lens of current interest rates. Yet another way to put it is that it can be hard to figure out if they have objectively risen or fallen, because of the changed rates. UPDATE: I can see a comment below says they have gone up in some places. Well, when both rates AND prices have gone up, it is not hard to tell :-)
- majormajor 4y ago
  Are they down YoY or compared to pre-Covid? The linked article doesn't seem to have that information concretely, but does include "The average British home now costs about nine times average earnings: one estimate I recently read reckoned that the last time UK houses were this expensive was in 1876." which suggests they're still higher by that measure than three years ago. So: correction of a super crazy time, but still a "win" for asset values for the owners over the last 4 years, or "overall trending down"?

benjaminwootton 4y ago

Not sure why you are being downvoted. Stock prices are on the slide and property prices and rental yields are extremely precarious. I also agree that low rates were good as you could invest in property with leverage and in businesses which could borrow and raise money to cheaply to grow. Nobody is having a good time right now.

ROTMetro 4y ago
Because only one class will come out of this with MORE assets that at some point will return back to their higher valuable. It's a completely facetious argument. Sure you lost your house, but think of how much the poor billionaire's paper value dropped (while the billionaires asset acquisition continued apace taking advantage of the firesale forced upon the lower classes).
- benjaminwootton 4y ago
  It isn’t facetious. People with investments and assets have lost a stack as inflation has taken off and could be waiting for a long time to return to the peaks. On a long enough timeline I’m sure you are right, but this year and likely over the next few years nobody is winning.
  - 20after4 4y ago
    If a billionaire loses 90% of their net worth, they are still rich.
    - Invictus0 4y ago
      If a beggar doubles his money, he's still broke.
    - concordDance 4y ago
      This is not relevant to the comment you are replying to.

ROTMetro 4y ago

Inflation, asset deflation and a financially strained middle/low class causing them to be upside down on debt = firesale on what assets they had for the top class to acquire. I believe this cycles used to be called pump and suck when directed at third world economies, get them addicted to debt then acquire their desirable assets. Crazy to see it being used now on the UK and USA middle class. We never thought the banking leopard would eat our face.

elevenoh4 4y ago
Monetary policy cycles are for insiders to use information to make more $ it's emergent out of the incentives e.g. the Cantillion effect it wont be around forever with AGI making this so obvious

dangwhy 4y ago

> Asset prices are highly inversely correlated to interest rates I present you the US housing market.

mellavora 4y ago
I don't quite understand. Are you commenting on the much discussed U.S. Housing Prices Fall for First Time in a Decade" stories? https://time.com/6217372/us-housing-prices-fall/ https://time.com/6217372/us-housing-prices-fall/
- dangwhy 4y ago
  that 'fall' is a joke. 0.44% ?
- vinyl7 4y ago
  Down 0.44% after 100% increase over the last two years

kobalsky 4y ago

> Asset prices are highly inversely correlated to interest rates this is true in the short term because a lot of assets are held with borrowed money. when interest rates go up those assets get sold to cancel the debt and bring down the market value. however, either if inflation is sustained or interest rates go down, asset values will inevitably bounce back, but money will NEVER recover its value.

deleted 4y ago

[deleted]

TheFattestNinja 4y ago

Always worth remembering that, at least for property prices, "being down 10%" doesn't mean that 1y they were worth 100 and this year are worth 90, but that 2y ago they were worth 100, 1y ago they were worth 110, and this year they are worth 119. In other words we often talk about "the % year on year increase is down", not "the value of the house is down".

wonnor 4y ago
Can you point to a single usage in the context of property prices where "being down X%", without specifying that X is referring to a YoY increase, means what you say?

AviationAtom 4y ago

Folks feast like kings when the cheap money is flowing, failing to realize that eventually the tab comes due. It's what you're seeing happening in Silicon Valley right now. Usually a reality check occurs every decade or so, bringing heads back down to Earth, but I think too many felt that the COVID lockdown lows in the markets were that reset. They then went right back to their old habits, after a brief pause. Just thinking about how long it took to recover from 2000, 2008, etc., it's obvious that we didn't truly have that reset. The lockdowns fundamentally changed a lot, but few people seem to want to acknowledge it. The effects of the lockdowns will been seen for a long time, I honestly do believe. Just my take on it all.