John T. Reed’s news blog
US dollar death spiral or vicious circle? Either way, we are about to hit a wall.
Posted by John Reed on
I recently wrote here that the increases in interest rates now going on will soon consume prohibitive amounts of the US budget. In Today’s WSJ, Red Jahncke, head of Townsend Group LLC says what I said in more detail. . I used the phrase “death spiral” of the USD. Jahncke uses the phrase “vicious circle.” . If you look at the pie chart of the budget, the biggest slices are health care, pensions, and defense, in that order—all over a trillion each. Then comes interest at a paltry $357B. Not for long. . Jahncke says with the new higher interest...
Wall Street Journal finally admits home prices are still going up.
Posted by John Reed on
The WSJ finally stopped trying to talk home prices down and reported on them accurately. Today’s headline is “Home-Price Growth Stays Strong Despite Mortgage-Rate Rise.” . Isn’t that nice? They even accompany that headline with an honest graph. Those have a zero on the Y axis at the bottom left. If they had not done that, like making the bottom left 15%, the drop in the last twelve months appreciation from 20.6% to 20.4% would have looked bigger. Nicole Friedman wrote this story. I do not know who decided on the honest-for-a-change headline. . And they graph the Case-Shiller home...
Wall Street Journal says current higher-than-normal savings may cushion a downturn. Do they know what inflation does to cash?
Posted by John Reed on
This headline in today’s Wall Street Journal jumped out at me. “Americans’ Cash Hoard Could Cushion a Downturn.”.Their WHAT kind of hoard?.“Cash.”.I read the article to see if the author, Justin Lahart, is aware of inflation and what inflation does to cash. Cash, meaning US dollar-denominated bank accounts, bonds, certificates of deposit..The article says US households held $17.8 T at the end of the first quarter of 2022..The most recent 12-month inflation rate was NOT MENTIONED IN THE ARTICLE: 8.6%..You know what 8.6% inflation does to $17.9T in cash? $17.9T x .086 = $1.539T purchasing power “up in smoke” in...
Only look at after-inflation and after-tax interest rates.
Posted by John Reed on
Stop talking about interest rates before inflation and taxes. The current mortgage interest rate is 6.79%. Inflation is 8.6%. That means the real interest rate is minus 1.81%. That is good news, not bad news. . If the interest is deductible on your income tax return, that means the AFTER-TAX cost is less if the real interest rate ever gets to be positive. . Hannity and others are so eager to paint Biden as bad, and uninterested in the truth, that they mislead by omission. Biden is bad in many, many ways, but driving down home prices is not one of them so...
Hannity says the .75% interest rate increase will cause home prices to plummet. He’s nuts.
Posted by John Reed on
Hannity just said home prices will plummet due to interest rate hikes. Was this idiot in a coma in the 1980s?. Here are home prices from that period from my book https://johntreed.com/products/an-american-principal-residence-is-the-most-advantaged-investment-on-earth-maximize-yours and mortgage interest rates from that period from my book Best Practices for the Intelligent Real Estate Investor https://johntreed.com/collections/real-estate-investment/products/best-practices-for-the-intelligent-real-estate-investor.year interest rates home price1970 8.56% $24,0021971 $25,7871972 $26,9001973 $27,5511974 $28,7901975 $32,0341976 $33,6931977 9.00% $36,6071978 9.70% $42,0441979 11.16% $48,8141980 13.95%...