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I think increasing housing values succeeded in solving the banking crisis that was created by the erosion of banking capital when they foreclosed on properties
by daft_pink 1y ago
I think increasing housing values succeeded in solving the banking crisis that was created by the erosion of banking capital when they foreclosed on properties that were worth less than the loan value, because the banks lent money without downpayment to subprime borrowers.
Now we're currently papering over the resulting sky high asset values by allowing inflation to erode the relative value of the sky high real estate.
- ethbr1 1y ago> Now we're currently papering over the resulting sky high asset values by allowing inflation to erode the relative value of the sky high real estate. That will only be true if inflation in non-housing accelerates and housing prices stay constant, which seems unlikely in a supply-constrained market. In any high-inflation scenario, real assets are likely to be highly attractive. Where else? Bonds, death. Equities, only if the economy keeps humming while inflation persists. Gold, bad price appreciation.