Coming Inflation, Stagflation and the Housing Market

U.S. Dollar worth about 1% of its original value. Economists agree greenback eventually doomed.
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The biggest risk for the stock market in 2021 is inflation, according to Morgan Stanley. Unprecedented radical spending by the federal government and the Federal Reserve, to stave off a panic-induced market crash, helped artificially drive stocks to temporary new highs last year. Morgan Stanley analysts worry that the unintended consequences of money printing and Fed spending sprees could abruptly change markets for the worse.

The biggest surprise of 2021 could be higher inflation than many, including the Fed, expect. The Fed’s massive spending during the virus hysteria has moved beyond simply filling holes left by exaggerated crises. While some mistakenly believe that we’ve seen a recovery, the tens of millions of unemployed and underemployed Americans feel otherwise. While some industries and monopolistic companies are doing better than ever, most medium sized and small business suffer, or go out of business completely.

By buying back $1 trillion in securities, the Fed has created a market that’s awash with cash, which historically helps drive inflation. Morgan Stanley warns that drunken-sailor Fed spending and helicopter handouts may drive up prices once the pandemic subsides. For food, household goods and building materials, inflation already hit well above 10% in 2020. Home builders report wood 2x4s and other construction commodities recently tripled in price. Increased construction costs contribute to increasing or flat home prices while the real value of the home may be decreasing, especially for neighborhoods with increasing blight, crime and homelessness, amid decreasing employment opportunities.

Many do not realize that prolonged artificially low interest rates create tremendous building of opposing pressure toward inflation, which can happen abruptly. This could mean very bad news for those who are overextended on short-term credit, such as home owners with variable rates and investors with balloon payments. Commercial real estate investors are already very hard hit.

The pandemic crisis, which thousands of censored medical doctors and health experts have labelled a hoax, was “perversely” positive for large companies. Epidemiologist scientists, including Professor Mark Woolhouse have warned that panic-induced overreactions including lockdowns have been a monumental disaster on a global scale, which should never been repeated.

The Federal Reserve is buying back $120 billion of Treasury bills and mortgage-backed securities each month, after initiating a massive $700 billion asset purchase program in March. The U.S. federal government, meanwhile, has authorized some $3.5 trillion in spending to shore up the economic recovery as a result of the pandemic. Trillions more of additional federal hand-outs are in the works.

President-elect Joe Biden nominated former Fed Chair Janet Yellen to head up the Treasury Department, a sign that the federal government could more towards universal basic income, the most colossal ejaculation of cash in history. That would create direct, explosive price inflation, exactly the sea of change that can lead to unexpected outcomes in the financial markets.

As the dollar rapidly loses value to blockchain cryptocurrencies, Morgan Stanley has recently increased its holdings of Bitcoin bulls such as MicroStrategy.

Ask Corey! READER QUESTIONS

Q: What is the contact information for Puerta Del Sol HOA home owners association in Los Angeles? A: Downtown and nearby neighborhood condo homeowners association contact information can be found at www.HOADTLA.com

Q: Are there any lawsuits with the 1100 wilshire property owners association? A: There are quite a few units at 1100 Wilshire for sale today. The building has several lawsuits in the past few years. We don’t see any signs of current litigation, but we have not received word on whether or not all of the lawsuits have been settled.

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Easy come, easy go. With unlimited money printing and QE infinity, inflation is inevitable.
Copyright © This free information provided courtesy L.A. Loft Blog with information provided by Corey Chambers, Realty Source Inc, BRE 01889449. We are not associated with the seller, homeowner’s association or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.