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House Price Crash Forum

The Fraud At The Heart Of Our Economy


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HOLA441

Old stuff to you guys, but at least its being said.

11.5% annual money supply. 37% of new money goes into property. ignored by CPI. 0.5% interest rates rewarding capital and assets, but penalising labour.

Here's a link

There is a fraud at the heart of our economy.

It is fraud that our leaders have chosen to ignore, if not actually perpetrate. It is a fraud that causes the wealth gap to widen. And it is a fraud that is destroying the middle class.

That fraud is inflation.

Read on ...

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HOLA442
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HOLA443

From the Independent link:

The Bank of England is an unelected body that wields tremendous power. For all the talk of its independence, its head is appointed by the Chancellor and is answerable to him. Serious questions need to be asked about what it gets up to with its and our money.

To say the very least.

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HOLA444

No matter the complaints of self-serving analysts, a look to the ranges of bond market interest rates or yield shows us that institutional investors who dominate the bond market are not at all concerned with the prospect of significant inflation... ;)

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HOLA447

'Wages have not kept up with the 67-fold increase in money supply. They've gone from about £2,000 in 1971 to around £25,000 today. Many families now find themselves having to work longer hours, with both spouses in the workplace, taking on larger debts and having fewer children just to maintain an ordinary middle class lifestyle. Many of their children face unprecedented levels of debt and, in many parts of the country, will never be able to buy a house.'

Disposable incomes have been hammered even more.

Great effort,and it's nice to see your/those/our views getting an airing outside of internet forums.

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HOLA448

*Liberal* perspective on the subject matter here from Paul Krugman...

http://

www.nytimes.com/2014/03/03/opinion/krugman-the-inflation-obsession.html

Krugman uses The Great Depression to compare with what is happening now. He's selective. He doesn't mention house prices which from the links below went down significantly and stayed down during that time.

http://

papers.ssrn.com/sol3/papers.cfm?abstract_id=2281004

http://

www.people.hbs.edu/tnicholas/Anna_tom.pdf

Of course he's referring to the US economy where house prices did fall during the latest economic collapse - but his comments don't seem fully to do with the UK economy with its crazy housing market especially with London's loony house price bubble.

The UK now seems well on the road to suffering almost as much economic fallout from following and being in parallel with US policies as the likes of Greece have suffered economic fallout from following and being in parallel with eu policies.

Edited by billybong
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HOLA449

Well explained. Although a bit 'ranty'. Danger of not being taken seriously. If you laid it out more 'scientifically' and dispassionately in terms of language, you could get a better hearing. And always good not to veer down a gold route in these explanations or you face the danger of being written off before getting a hearing.

Altogether though, if it helps just one person to start thinking, it has been well worth doing.

I spend my whole time trying not to be ranty

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HOLA4411
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HOLA4412

Krugman uses The Great Depression to compare with what is happening now. He's selective. He doesn't mention house prices which from the links below went down significantly and stayed down during that time.

Of course he's referring to the US economy where house prices did fall during the latest economic collapse - but his comments don't seem fully to do with the UK economy with its crazy housing market especially with London's loony house price bubble.

The UK now seems well on the road to suffering almost as much economic fallout from following and being in parallel with US policies as the likes of Greece have suffered economic fallout from following and being in parallel with eu policies.

When Krugman can furnish us with a credible explanation for 2008 it might be worth taking him seriously.

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HOLA4413
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HOLA4414

Old stuff to you guys, but at least its being said.

11.5% annual money supply. 37% of new money goes into property. ignored by CPI. 0.5% interest rates rewarding capital and assets, but penalising labour.

Here's a link

There is a fraud at the heart of our economy.

It is fraud that our leaders have chosen to ignore, if not actually perpetrate. It is a fraud that causes the wealth gap to widen. And it is a fraud that is destroying the middle class.

That fraud is inflation.

Read on ...

When will a LVT become too lucrative to ignore? Can't see the Tories Rentier party doing it. Would Miliband's Labour (with maybe a LibDem coalition) have the balls?

I don't care if it's on top of current tax rates, just so long as it pops this property bubble.

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HOLA4418

You're looking in the wrong direction RK.

The 'velocity' gets bogged down in the asset markets and the vortex of interbank trading. Hidden from the view of traditional 'velocity' measures.

MV. Pretty simple.

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HOLA4419

Good article Dominic - it's corrupt economics from corrupt institutions. Those that have done very well out of property have done so by being given other peoples money via government sponsored inflation theft. Inflating peoples earnings and savings gets you almost free property after many years of compounded inflation - just make sure your pension is inflation protected whilst your at it!.

If there was ANY doubt as to how asset bubbles are created and who creates them, then the last 5 years has clearly shown who the big bogey man of inflation really is. Knowing how the fraud works at least gives you a chance......

QE money printing is just corrupt economics taken to another level. They have used real money (taken from peoples savings and earnings via negative interest rates) to try and maintain the artificial prices created by the previous credit bubble they themselves created.

The only way the VI's can hold onto these ill gotten gains and fantasy prices 'post-2007 credit bubble' is to keep taking more money from the real economy and funnel it upwards into the property pyramid. Ultimately that's making the majority of us poorer each year and is leading us into an even bigger recession.

Clearly those in power want more of the same failed policies which is why we have negative interest rates. The message is clear - borrow, speculate and take on more debt to buy property. They don't care if they create another bubble so long as they stay in power.

So why are US house prices back to long term trend? The bubble completely burst? and core inflation below target?

Is it because of the size of the FED b/sheet and all their fraudulent money printing QE?

Doesn't stand up to even the simplest scrutiny.

p.s. Completely agree re wages. That's a distributional issue though. Which isn't the job of a central bank. That's the job of govt. which I dare say the OP would want to abolish.

Edited by R K
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HOLA4420

So why are US house prices back to long term trend? The bubble completely burst? and core inflation below target?

Is it because of the size of the FED b/sheet and all their fraudulent money printing QE?

Doesn't stand up to even the simplest scrutiny.

p.s. Completely agree re wages. That's a distributional issue though. Which isn't the job of a central bank. That's the job of govt. which I dare say the OP would want to abolish.

US house prices were up 13% nationally last year. Some metro areas are experiencing 30+% hpi.

US equities and UST's are in an enormous QE-fed, China/Japan supported bubble.

Aggregate debt (the ultimate bubble) has fallen slightly since 2008 due to deleveraging but at around 270% of GDP remains far above where it was even at the beginning of the Great Depression in 1929. Future govt liabilities and contingent obligations would see US debt/GDP race off to infinity if honoured - which of course will never happen.

total-us-debt-82-2012.png

Edited by zugzwang
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HOLA4421

US house prices were up 13% nationally last year. Some metro areas are experiencing 30+% hpi.

US equities and UST's are in an enormous QE-fed, China/Japan supported bubble.

Aggregate debt (the ultimate bubble) has fallen slightly since 2008 due to deleveraging but at around 270% of GDP remains far above where it was even at the beginning of the Great Depression in 1929. Future govt liabilities and contingent obligations would see US debt/GDP race off to infinity if honoured - which of course will never happen.

US house prices bust completely to -1sd trend. They were generationally cheap. One would expect them to rise from that. You'd be pretty stupid not to buy one. Why is that 'fraud'??

The word 'Bubble' is used far too widely in my view. Clearly if the FED are correct and buying bonds lowers marginal yields and raises asset prices then the corollary of the FED b/sheet is higher equity and bond prices. Why is that 'fraud'? Buy equities or a house. Nobody is forced to keep cash savings.

One can argue whether a disorderly deleveraging is preferable to a managed one. It's been done to death.

Wealth and income inequality is different. There's nothing at all to stop Congress from raising wealth and income taxes or capitalists recognising that it's in their interests to raise the return to labour. There's plenty of literature on this not least Mr Marx. Clearly it's rapidly moving centre stage as perhaps the biggest issue of our times. Quite right too.

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HOLA4422
Wealth and income inequality is different. There's nothing at all to stop Congress from raising wealth and income taxes or capitalists recognising that it's in their interests to raise the return to labour. There's plenty of literature on this not least Mr Marx. Clearly it's rapidly moving centre stage as perhaps the biggest issue of our times. Quite right too.

I'm not sure it's that simple anymore- even if everyone agreed in principle that it would be a good thing if labor got a larger share of the cake competitive forces on a now global level would still drive that share lower- because now labor is not only competing with itself, it's also competing with technology to a much greater degree than in the past.

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HOLA4423

I'm not sure it's that simple anymore- even if everyone agreed in principle that it would be a good thing if labor got a larger share of the cake competitive forces on a now global level would still drive that share lower- because now labor is not only competing with itself, it's also competing with technology to a much greater degree than in the past.

Doesn't prevent owners rebalancing wages if owners find themselves all in the same position. In the end there is only one flock to fleece.

The real problem is rents. There is a lot the state can do about that, mainly by making debt less attractive.

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HOLA4424

I'm not sure it's that simple anymore- even if everyone agreed in principle that it would be a good thing if labor got a larger share of the cake competitive forces on a now global level would still drive that share lower- because now labor is not only competing with itself, it's also competing with technology to a much greater degree than in the past.

These are all ultimately choices. Robots don't consume (much), so who buys the robots production?

Govts. can tax the use of robots or the profits derived from them if it results in the share to labour falling or mass unemployment.

What about global competitive forces driving the return to labour up? or the trillions hidden from tax in British tax havens? These are all choices not absolutes.

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