Re: Interest rates and housing
Are you saying that there's a real cycle of real estate that takes 18 years from (from peak to peak or from peak to trough?)? David That is the usual cycle, although there are exceptions. That seems different from your initial contention that the current bubble has been caused by monetary growth. My contention is that there are two causes, monetary and real (including fiscal), and the causes are complementary. The timing of the cycle is inherent in the nature of the real estate market for rentals and construction. then do you predict a collapse of real estate prices based on monetary or real factors, or both? Both Fred
Re: Interest rates and housing
If the real estate cycle is based on government expansion of money, David It is based on that and also on fiscal policy and the inherent nature of real estate rentals and construction. why has it been the same under three or four different monetary systems? It does not matter much to the economy why there is a monetary expansion. In the 1830s the expansion was caused by the state control of banks, including the prohibition of branch banking, and with banks having to buy state bonds, and excessively issuing currency. The effect was similar to today's expansion of money by the Fed. It's essentially the Austrian-school business cycle, with the higher-order capital goods consisting of real estate construction. See my paper referenced in the cycle table for further explanation. Fred
Re: Interest rates and housing
In a message dated 8/16/05 10:24:56 AM, [EMAIL PROTECTED] writes: The last real estate bottom was in 1990, so if this is another 18-year cycle, the next depression would be around 2008. So far, the economy is tracking the cycle right on schedule. In my judgment, the economy is entering the plateau stage. Heh, Fred, I guess you are the only armchair economist left. If government has causes a real estate price bubble by artificially loweringn interest rates, how can it have an 18-year cycle, and why would it be the same under the federal serve system as it was under free banking or the period from the Civil War to the establishment of the Fed? Why does the money go into residential real estate and not into stocks or automobiles or other assets? Thanks, David
Re: Interest rates and housing
Hopefully others on Armchair are on vacation and not permanently gone. I find these exchanges fascinating and often helpful. From: ArmChair List [mailto:[EMAIL PROTECTED] On Behalf Of [EMAIL PROTECTED] Sent: Thursday, August 18, 2005 3:57 AM To: ARMCHAIR-L@mail04.GMU.EDU Subject: Re: Interest rates and housing In a message dated 8/16/05 10:24:56 AM, [EMAIL PROTECTED] writes: The last real estate bottom was in 1990, so if this is another 18-year cycle, the next depression would be around 2008. So far, the economy is tracking the cycle right on schedule. In my judgment, the economy is entering the plateau stage. Heh, Fred, I guess you are the only armchair economist left. If government has causes a real estate price bubble by artificially loweringn interest rates, how can it have an 18-year cycle, and why would it be the same under the federal serve system as it was under free banking or the period from the Civil War to the establishment of the Fed? Why does the money go into residential real estate and not into stocks or automobiles or other assets? Thanks, David
Re: Interest rates and housing
If government has caused a real estate price bubble by artificially lowering interest rates, how can it have an 18-year cycle, David Because real estate construction takes years, and recovery from a downturn takes years. An exception is an inflationary boom that is not a real economic recovery, such as the stagflation of the 1970s. That's why there was a real estate peak in 1979. Why does the money go into residential real estate and not into stocks or automobiles or other assets? The money goes into all real estate, not just residential. Of course it also goes into stocks, as with the tech boom of the 1990s, followed by the downturn of 2001, which was not caused by real estate. But the real-estate boom prevented the 2001 recession from becoming major. The big depressions have all followed real estate booms. Fred
Re: Interest rates and housing
In a message dated 8/18/05 11:28:53 AM, [EMAIL PROTECTED] writes: --- Technotranscendence [EMAIL PROTECTED] wrote: there are political cycles too, such as the Presidential cycle. Yet this doesn't line up with 18-years. Yes, there several cycles going on at the same time. There are also random shocks. The 2001 downturn was not caused by real estate, for example. But some have more impact than others, and my analysis of historic cycles indicates that the real estate cycle is the most economically significant one. Fred Foldvary Fred, If the real estate cycle is based on government expansion of money, why does it have an 18-year cycle, any why has it been the same under three or four different monetary systems? David
Re: Interest rates and housing
In a message dated 8/18/05 11:40:59 AM, [EMAIL PROTECTED] writes: If government has caused a real estate price bubble by artificially lowering interest rates, how can it have an 18-year cycle, David Because real estate construction takes years, and recovery from a downturn takes years. An exception is an inflationary boom that is not a real economic recovery, such as the stagflation of the 1970s. That's why there was a real estate peak in 1979. Why does the money go into residential real estate and not into stocks or automobiles or other assets? The money goes into all real estate, not just residential. Of course it also goes into stocks, as with the tech boom of the 1990s, followed by the downturn of 2001, which was not caused by real estate. But the real-estate boom prevented the 2001 recession from becoming major. The big depressions have all followed real estate booms. Fred I don't follow you. Are you saying that there's a real cycle of real estate that takes 18 years from (from peak to peak or from peak to trough?)? That seems different from your initial contention that the current bubble has been caused by monetary growth. Are you saying both things? If so, then do you predict a collapse of real estate prices based on monetary or real factors, or both? David
