Toronto`s Real Estate Bubble

[Darr]

A view with some entertainment thrown-in.


BTW, I think the irrationality of low interest rates must eventually end. However, I also subscribe to the notion that politicians and bankers will attempt to push that decision as far down the road until they can`t. This is more palatable than normalizing rates right now thus pushing the over-leveraged households off the cliff. Unfortunately, it will create boat-loads of inflation in hard assets and staple necessities. People on fixed income and savers will be crushed in the process. We just might see violent runs on supermarkets before this is over.

I need a drink!

 

[Thomas Beyer]

[quote user=Darr]BTW, I think the irrationality of low interest rates must eventually end.
Must it ? "Eventually" might be 20-30 years out ...



[quote user=Darr]... However,
I also subscribe to the notion that politicians and bankers will
attempt to push that decision as far down the road until they
can`t.


Indeed. Democracy mean promises (to get re-elected). Promises means overspending, i.e. debt, or rather perpetual debt. Look no further than US, Canada or Europe. Debt gets bought back by Central Banks, devaluing the currencies due to low low interest rates and so-called "quantitative easing" (usually called print money, but now it is done electronically, far easier actually).



Thus currencies will depreciate vs hard assets, such as gold, silver, oil, corn, land ..



This trend will continue for some time, say 2-3 decades. Thus, it helps to buy such hard assets, with borrowed cheap money. I do it in real estate (which comes with land, usually and a sizable mortgage) but it also works with other hard commodities, i.e. gold mines, oil wells, ..



Real estate is king here as money is much cheaper and far more as a % of asset value can be borrowed vs say a riskier gold mine or an oil well.



So, borrow at 2-3% and invest at 5 to 7% .. makes sense to me !



Why is oil around $100 - it used to be $20 .. why is gold $1600 .. it used to be $200 .. why is farmland in Europe $20,000+ an acre .. it used to be $5000 .. etc.



Some oil, same gold, same land .. just the currency is weaker.



Cash is trash.



Govern your (investment / life ) decision accordingly !

 

[Darr]

We're obviously on the same page. I've been saying this since I joined this forum (and three years prior). History has repetedly shown that such anomalies can only end either in shock or war. Leaders (and their money masters) have alway chosen the later to deflect the problem away from their own wrongdoing.

 

[Rickson9]

Another (relatively useless) op-ed entitled "US Hyperinflation Is A Myth".



I've read both sides of the coin, and the opinions are useless in helping me make any money, so I tend to treat them as I do the Sunday morning comics - as entertainment value only.



http://theautomaticearth.com/Finance/us-hyperinflation-is-a-myth.html

 

[Darr]

[quote user=Rickson9] useless in helping me make any money


Myth or not, you are right about your highlighted quote. We can't change this course of history and it does not help us make money. Let's move on.