Re:Investors bought a record share of U.S. homes in 2021
by vkou on Thursday February 17, 2022 @07:36PM
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Used cars are not supposed to go up in value.
That's due to a demand spike and supply shortage. Blame bitcoin and video games and people not wanting to take public transit in the middle of a global pandemic. It's not because of monetary policy, or because Scrooge McDuck borrowed a trillion dollars for free to buy up a bunch of used cars, or because GOOGL doubled in value in two years.
> I expect asset prices to continue to inflate as long as we continue with our current monetary policies.
Why? If it didn't make sense to invest money at a P/E ratio of X at a Y%-for-you interest rate, why would you invest money at a P/E ratio worse than ~2X, at a Y/2%-for-you interest rate?
I get that the process of going from X to ~2X is painful, but why wouldn't it stop there?
For sure, but you'd be met with market rates that tame your desire for money now. Buying a car on credit is a lot less tempting at 20% interest than 4%. Right now used car prices are going up and it's easy to get low interest financing.
Used cars are not supposed to go up in value. It's madness.
> But once they do normalize, why do you expect asset price inflation to continue?
I expect asset prices to continue to inflate as long as we continue with our current monetary policies.
I expect us to continue with our current monetary polices because the US would be unable to service its debts in about decade otherwise.