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GEAB N12: Impact phase of the Global Systemic Crisis: April 2007: Inflexion point

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  • #16
    Re: GEAB N12: Impact phase of the Global Systemic Crisis: April 2007: Inflexion poin

    Originally posted by grapejelly
    what about the Inflation Adjusted Probabilistic Bear - believes what you said but in REAL value terms, while believing that chances are high that asset prices can forever increase in NOMINAL terms.

    (forever until the current money approaches its assymptotic zero value and is replaced by something else.)

    Steve Saville pointed out in a commentary that stocks *always* were over-valued when their dividend yields were less than bonds' yields for any length of time. It was a truism that stocks had to pay higher yields than bonds to reward holders of stock for their extra risk.

    Until 1959 that is when this rule got tossed out the window. Inflation put that one to rest.

    The "crash" of the housing market could be a REAL value crash but a NOMINAL period of prices tending lower for awhile then picking up with no crash of nominal prices.

    Inflation Adjusted Probabilistic Bears expecting the stock market to crash may be right in real terms but they understand that in nominal terms this won't happen because the virulent inflation makes "this time is different" really true!
    To keep households solvent, rents need to be nominally higher than the cost of mortgages. How to raise rents so that existing mortgages become affordable? That is the thinking behind this...

    Inflation is Dead! Long Live Inflation!

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    • #17
      Re: GEAB N12: Impact phase of the Global Systemic Crisis: April 2007: Inflexion point

      I think the bipolar bear is sometimes also the WTF bear!

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