Marty

Don't believe Paulson: S&L 2.0, the Bank Failure Redux

I would like to comment on this comment " inflation is going to get out of control in the near future. Does this also apply to home prices?"

One would think this would happen. The problem is , the things inflating are the things people have to pay for or the things they own. Without the WAGE inflation there is no ability for prices on homes to go up. In the 70s and 80s there was wage inflation.

I will give you a simple example.

During the "terrible inflation of the Carter years" (As we are told to call it), peoples wages ALSO went up. Social security was indexed 75% over 10 years. At the end of the inflation, everyones income was up 75%-100% or more. Now, the higher incomes could easily pay down the mostly fixed debts and that allowed asset prices to increase. When your costs go up, but your income does not (even further distorted by todays lack of benefits) prices on homes will not go up because people cannot afford them.

This is a real mess, and it will take good leadership. The concentration of wealth is so great this time that even the upper middle class is in trouble.

Marty