The Fed now owns nearly 1/3 of all U.S. mortgages

Post by rorykoehler » Wed, Sep 09, 2020, 7:02 PM UTC

jdm2212 wrote: post #240

rorykoehler wrote: post #96

Earlier quoted context omitted.

If the Fed create $1T new money the worst thing you can do is sit on cash. That’s a guaranteed negative return.

No, the guaranteed negative return is only if you expect rising inflation. Whether $1T in new money turns into inflation depends on what people choose to do with the new money. If they're all terrified about economic uncertainty, they won't spend the new money, and there won't be inflation. But you're right insofar as the Fed is trying to change inflation expectations by printing money. But so far they've failed beca…

Post by opportune » Wed, Sep 09, 2020, 7:08 PM UTC

sokoloff wrote: post #294

opportune wrote: post #286

Earlier quoted context omitted.

Condos in NYC have fallen about 10-20% lately (at least the ones I was looking at) so even with rising rates I doubt it could go underwater once the pandemic is over

It seems quite possible that, depending on the course of the pandemic (short-term) and a related long-term evolution of remote work in finance/tech, that the footprint of highly compensated employment and demand for real estate becomes much more spread out. In a scenario like that, coupled with 8% mortgage rates, I could easily imagine a 50% haircut to high priced real estate.

Post by _dps » Wed, Sep 09, 2020, 7:12 PM UTC

JackFr wrote: post #246

dternyak wrote: post #49

Earlier quoted context omitted.

Of course, I'm familiar that the U.S. exports goods as well. Certainly the relationship specifically with China is one of a large and continuous trade deficit. However, the broad intention of my previous comment is to illustrate that the narrative being that the U.S. is simply one of purchaser is lacking, or else if that narrative is correct, it will not be true for much longer once the trading partners catch on.

The same question was said about Japan in the 1980's. There was much hand-wringing over our trade deficit with Japan. (Though I had an econ professor back then who I thought put it best: "We're getting cars and they're getting pieces of paper, and somehow we're the ones getting screwed?")

  - American Boomers got cars

  - Japanese boomers got USD
  
  - Japanese investors then spent much of the USD on things like US real estate investment vehicles (hardly Japan only, any country that collected large amounts of USD due to trade deficit)

  - American Boomers in prime markets saw tremendous returns on real estate
  
  - and American millennials 30 years later got priced out of houses

Post by WealthVsSurvive » Wed, Sep 09, 2020, 7:16 PM UTC

crisdux wrote: post #217

black_puppydog wrote: post #179

Earlier quoted context omitted.

> Governments do not have a history of distributing scarce resources effectively. To be fair, "various market forces" also don't have the best track record of distributing resources, especially scarce ones. Somehow those always end up being "distributed" into the same few hands...

To be fair, how is that even remotely true? Look at the wealth, convenience, leisure and abundance all around you. Even people with lower income experience high standards of living. The system we have now is not without fault, but it has done better than any other before in meeting our needs and desires. I don't understand why people make wild claims that everything is distributed to only a few hands, thats preposter…

Post by JMTQp8lwXL » Wed, Sep 09, 2020, 7:55 PM UTC

bfrog wrote: post #255

JMTQp8lwXL wrote: post #18

I would be curious to see analysis for what home prices would be with 0 Fed intervention. Also, I don't understand how millennials aren't supposed to see this figure and immediately feel a sense of rejection, that the housing market is some form of a pyramid scheme, where you had to get in early to have a chance.

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.