San Diego Housing Market News and Analysis
Buying with monopoly money
User Forum Topic
Submitted by lifeizfunhuh on December 17, 2010 - 5:11pm
Ok all, here is my first post. I've been firmly in the camp of "don't buy, more to come" for the past several years as others around me take the plunge. However, I just went into escrow last week on an incredible property that my wife and I came upon by accident.
Now to establish my bona-fides, just let me say I'm a finance geek.I'm a class action attorney that sues banks and other financial firms for screwing over the little guys.
Here's my reasoning: I'm not the only one who thinks that serious inflation is coming, and in situations of high inflation, real assets appreciate. My hope is that I can leverage my 30 yr. 4.5% fixed to pay back my loan with monopoly money and wind up with a virtually free house.
What do we all think the end game is with QE? My thought is that the "official" plan is to inflate away all this debt that is being created. That is the only way out. Its either inflation or default. Inflation is of course an implicit default, but that's the problem of the Chinese and everybody else who is buying our debt.
We've all heard the story that the banks are hoarding money the get from the government and not lending. But why? My birdies tell me they are buying up REAL assets with the virtually free money they get at the Fed discount window. In my opinion, low fixed interest rates on free money is the best investment game in town, unless you have access to the discount window. I don't.
So leverage up people... this still is a no-recourse state and if you can happen to find a decent house that you can get for 10% or 3.5%, get yourself some of that cheap money and buy something that will get more valuable with inflation. I can virtually guarantee that we will see numbers higher than the 5% rate you'll get on your loan.
There are alternative hard (i.e., REAL) assets you can buy, like commodities, classic cars, art, etc. but you can't buy those with "other people's money".
As I heard someone say, "I don't care IF the market is rigged, just so long as I know HOW the market is rigged so I can play along at home."
What say you PIGGS?
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