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bogbrush

Hpc V Printy Printy

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It seems sometimes that there are two things that many people on here agree about; that there will be vast printy and at the same time a HPC is inevitable.

But forgive me for being a bit thick here, but aren't they mutually exclusive? If we get the printy then surely house prices denominated in that debased currency go through the roof? Now of course they may both lose value versus another asset - could be yellow metal or oil or cocoa of copper or whatever, but against each other one has to win if the other loses.

We could talk about other currencies, but most of the West seems set on the same course; the Yanks are printing for fun, the Germans wouldn't but they have the Euro and need to attend to the rest of that bloc (inc the French who it seems would rather shut the country down than work another two years). I can't see much going on there except a sort of haphazardly uncoordinated group devaluation.

So what is it folks? Printy printy OR a HPC? Or am I missing something?

My own bet is on the printy (I can't see the asset base of the money system being allowed to shrink and precipitate another, bigger, crunch). That gets me to thinking that house purchases aren't such a bad idea; sure they are dropping now but what happens when the helicopters fire up big time?

PS I don't even trust yellow metal, not after I heard about Tungsten. I mean, I simply cannot believe that some Russian gang isn't plating up Tungsten sovereigns right now. If I can think of it I'm sure they will do it. If just one of those turned up World wide what hope for the price of those little things?

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for QE to up house prices, one thing has to happen...lending has to rise.

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for QE to up house prices, one thing has to happen...lending has to rise.

Not if the printy is done deliberately to compensate for the contraction in money supply caused by tighter lending.

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I thought the debate was more about whether HPC would be nominal or real. I think the PTB have accepted the latter, but would like to add a little of the former to the equation in the hope that this will save the banks and not scare the horses too much.

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Not if the printy is done deliberately to compensate for the contraction in money supply caused by tighter lending.

thats the idea, but, interest rates are at bottom, wealth creation is at a minimum, therefore, the loan service ability is low.

you can issue all the money you like, but if people wont borrow it, it stays in the banks...as it did in round one.

The very idea of QE was to raise asset prices.

course deflation still occurs, or if you prefer, the BUST occurs, indeed you can have a bust even with GDP growth....high order goods prices come to meet low order goods prices,....until balance is restored, the BUST remains.

devaluing the means of exchange doesnt change the reality of the imbalance..indeed, too much printing will lead to severe inflation...course, to maintain ANYTHING at all, in spite of the real lowering of cost of debt, doing anything new required even more borrowing...

Wealth creation is the key. Printing solves nothing, but keeps a few bankers in jobs, robs pensioners and savers.

try and spend an hour with this guy:

http://video.google.com/videoplay?docid=-2382683217626362775&q=krassimir+petrov#

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Inflation will wipe out more than it will save. We are a hopeless importer of finished goods, raw materials and energy. Already debt-soaked even if by magic (i.e. govt/BOE colluding to buy up every gilt issued to keep nominal rates low) the average consumer will still end up screwed to the floor by inflation and no leverage to get the jobs and income back that have already gone.

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Wealth creation is the key. Printing solves nothing, but keeps a few bankers in jobs, robs pensioners and savers.

No argument there, I'm not advocating a solution. I merely wonder why we might think that we'd end up with using a £10,000 note for the groceries but have a nominal HPC. And if we accept a nominal rise and a real fall, in what denomination are we measuring the fall, and exactly how relevent is that to most people sitting on cash right now contemplating a house purchase?

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No argument there, I'm not advocating a solution. I merely wonder why we might think that we'd end up with using a £10,000 note for the groceries but have a nominal HPC. And if we accept a nominal rise and a real fall, in what denomination are we measuring the fall, and exactly how relevent is that to most people sitting on cash right now contemplating a house purchase?

we are a long way from hyperinflation...they have to literally hand out money to spenders.

QE at the moment, and QE2 is purely to support the banks. they need more thanks to Basle capital requirements...not only that, Politics demands that the BoE do something....

course, raising rates would help the real economy.

clearly, if hyperinflation takes off, the last thing on peoples minds will be their house price. Staying alive might rank a bit higher.

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we are a long way from hyperinflation...they have to literally hand out money to spenders.

QE at the moment, and QE2 is purely to support the banks. they need more thanks to Basle capital requirements...not only that, Politics demands that the BoE do something....

course, raising rates would help the real economy.

clearly, if hyperinflation takes off, the last thing on peoples minds will be their house price. Staying alive might rank a bit higher.

I exaggerated to make the point, and in doing so perhaps obscure it behind hyperinflation.

We already have strongly negative real deposit rates; exactly how bad does a HPC have to be to persuade someone with cash buring a hole to buy a house?

Obviously this thread is emphatically about cash buyers, not credit purchases. Anyone taking out debt has to be very confident or mad.

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I exaggerated to make the point, and in doing so perhaps obscure it behind hyperinflation.

We already have strongly negative real deposit rates; exactly how bad does a HPC have to be to persuade someone with cash buring a hole to buy a house?

Obviously this thread is emphatically about cash buyers, not credit purchases. Anyone taking out debt has to be very confident or mad.

didnt think there were ANY cash buyers...they are a myth...course, thats based on the simple observation that APPROVALS for mortgages are running higher than COMPLETIONS.

I suspect, though, that many approvals do not lead to sales....saying that, putting your cash in a falling asset is also a gamble. And if inflation begins to take off, then the cost of borrowing will go up.

Or, I could declare you ARE Daddy Bear and claim my £5.

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We are already seeing (IMO) the effect of QE on hpi, but only in certain areas.

The QE issued so far has not trickled into the wider economy. It's just sitting in the banks. The banks aren't going to lend money to bad risks, even if it is devalued. As was said earlier, it's sitting in the banks reserves to allow them to meet regulatory requirements, and being used to invest in other assets other than home loans (guess).

The banks are making money out of this. This money is going to bonuses, and those bonuses are being spent on houses. Hence the HPI in London.

Repeating what was said earlier, the only way hpi will increase is if the government forces the banks to lend to specific sectors. The government may well do this if there is a serious crash in house prices (say greater than 30%), but I believe that the government actually wants house prices to deflate as it knows they are unsustainable, it just wants them to do so in a relatively slow and controllable (????) way rather than an out and out crash.

I think the government is smart enough to realise that QE2 is only going to have the desired effect if the money makes it out of the banks into the wider economy and therefore it needs to do something in addition to the money printing in order to make this happen. What this would be is anyones guess.

I don't think the government will QE like last time, as it would do no good. I also think that the government has some resistance to QE'ing because it was a Labour policy. At the moment it can blame all sorts of ills on QE. But if it chooses to QE itself it can no longer blame any effect that QE has on the previous government.

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PS I don't even trust yellow metal, not after I heard about Tungsten. I mean, I simply cannot believe that some Russian gang isn't plating up Tungsten sovereigns right now. If I can think of it I'm sure they will do it. If just one of those turned up World wide what hope for the price of those little things?

Bullion bars maybe, but as tungsten is so hard it is difficult to stamp into coins.

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Bullion bars maybe, but as tungsten is so hard it is difficult to stamp into coins.

Worth the effort though.......

And the bullion bars? I wonder whether there's much Tungsten sitting in vaults around the World right now?

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Of course printy printy can win if that's what the Government chooses.

The Government could easily turn around and do a printy printy tax cuts for example. How about no income tax say for 10 years all to be covered by printy printy.

Yes, bond holders would be peed off and would lose money, and Sterling would fall, but we'd be cheaper and more competitive as a result, and even if import prices doubled, most would be rolling in nice bundles of freshly wet notes. Of course you might not want to hold any enforceable foreign debt, that may be a price worth paying.

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Of course printy printy can win if that's what the Government chooses.

The Government could easily turn around and do a printy printy tax cuts for example. How about no income tax say for 10 years all to be covered by printy printy.

Yes, bond holders would be peed off and would lose money, and Sterling would fall, but we'd be cheaper and more competitive as a result, and even if import prices doubled, most would be rolling in nice bundles of freshly wet notes. Of course you might not want to hold any enforceable foreign debt, that may be a price worth paying.

This worked well for South during the American civil war. Can't see why it wouldn't work this time.

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didnt think there were ANY cash buyers...they are a myth...course, thats based on the simple observation that APPROVALS for mortgages are running higher than COMPLETIONS.

What have mortgage approvals vs completions got to do with cash buying?

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I exaggerated to make the point, and in doing so perhaps obscure it behind hyperinflation.

We already have strongly negative real deposit rates; exactly how bad does a HPC have to be to persuade someone with cash buring a hole to buy a house?

Obviously this thread is emphatically about cash buyers, not credit purchases. Anyone taking out debt has to be very confident or mad.

Last time round house prices fell by about 18% before the market bounced due to various factors - I suspect one of those factors was people hedging against inflation, but I think the main one was lack of supply. This time round it'll be interesting to see what happens when/if prices fall another 10%. Conditions are different - there's plenty of supply and we have a government offsetting QE with cuts. Also sentiment seems to be different - the MSM is sending out a different message and the banks seem to be pricing in further falls by using stricter lending criteria. It doesn't matter how much QE takes place (within reason) banks aren't going to lend more if they think house prices will fall. So without those props I think people holding cash might decide that house prices aren't going anywhere for a long time, and they might choose other asset classes to hedge against inflation.

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Hi All

I've been away for a year but I was thinking about the very same thing as bogbrush so came back on here to see what the concensus was. Nice to see all the old names still online.

Argentina has 25% inflation at present and if you read Bill Bonner, they are in a crack up boom with people spending money before it becomes worthless. Houses increasing dramatically in nominal terms (and possibly in real terms too if supply is low) as a hedge against inflation. He says the buyers are cash buyers.

Now it may be that the UK doesn't have enough cash buyers to cause HPI while credit remains tight so the question is whether QE will work through to the mortgage borrower.

Where I live house prices are still vastly out of synch with wages or rental income and both these look like taking a hit as public sector is largest employer so on fundamentals it looks like a bad time to buy but if the crack up boom happens we can look at history and see that property will be sought after as a wealth protector. Like they say no one with 100oz of gold will ever be poor the same goes for anyone with 2 or 3 houses (unless property rights are removed).

Just my opinion.

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And the bullion bars? I wonder whether there's much Tungsten sitting in vaults around the World right now?

I heard some place called Fort Knox is full of tungsten... :D

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IF printy printy means more total national debt, I am not sure the governement will agree with it- I hope not. It is disappointing to have to base decisions on the actions of a governement that has already reneiged on many of it's manifesto and pre election statements. I am with a 15-20% nominal fall in the next 18 months.

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  • 142 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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