Hello Foundation
“House prices have averaged around 8.5% pa since 1970. No more, no less (time and value). I can explain “Why is this so?” if anybody cares to listen. “
I certainly care to listen and so does Artaud.
Please [smiling]
ElkaOk i’ll listen :> thats one person. How many more do you need to listen before you explain?[biggrin]
I too would like to hear/see your theory …
yep, I am curious as well
Tammy… and certainly I will explain. However, I didn’t wish to just jump in with gross generalisations and inaccuracies. First I needed to research the facts to support my theory, now I’m ready to jump in with gross generalisations and inaccuracies! [oneeyed]
Give me a day or two and I’ll complete my explanation. Part one follows.
Cheers, F.[cowboy2]
“House prices have averaged around 8.5% pa since 1970. No more, no less (time and value.)â€
The emphasis in that statement was intended to fall primarily on the 1970 bit, rather than equally with the value bit. Nonetheless…A most important event occurred in 1971. One event that has, if you like, enabled house prices to rise at a rate commonly referred to as “doubling every 7 to 10 yearsâ€. A nominal rate averaging between 7% and 10%. This event was the collapse of the Bretton Woods system of international monetary management. And why was it important? Because it marked the beginning of true fiat currency in this country.
Important Note!
Despite my undeniable attraction to gold, I wish to make it clear that in no way am I an advocate of a return to a gold standard, partial convertibility or even to a full-reserve lending/banking system.A bit of history
For over 2500 years, gold has been used as currency. Silver, much longer.
Here in Australia, we are a nation of the British Commonwealth. However, in our early days we weren’t even a country, we were a colony, and legal tender here was imported from England. The primary unit of account was the pound sterling. Originally (ie 1100ish!), one pound had represented one troy pound of sterling (>95% purity) silver. But by the mid 1500s, the pound sterling replaced the original penny (1/240th pound). Still following? No. Hrmph. Moving right along!By the time our shores were settled, Sir Isaac Newton had set the value of silver to gold, at around 4 pounds sterling to the ounce. Effectively, our monetary systems operated under a defacto gold standard.
In 1844, Britain introduced an act to the effect that the Bank of England could issue notes that would be legal tender, and fully redeemable in gold. This was a true gold standard.
In 1910, Australia introduced its own currency, the imaginatively titled pound. One Australian pound was fixed in value to one pound sterling, which was redeemable in gold.
After that, things get messy. We (the Commonwealth) went to war. In order to print money to buy ships, guns and ammunition, the UK abandoned the gold standard. It believed that it would win the war, head home with the spoils (masses of gold) and be able to return to the gold standard, no harm done. Or something. Unfortunately, when the gold standard was reinstated in 1925, it forced a deflation on the economy (Austrian economists might say this was actually just a reaction to the inflation that had occurred during the years without a gold standard). Eventually, most of the world abandoned gold convertibility in response to the Great Depression.
The next really exciting (
) development in monetary history occurred in 1944. The 44 ‘Allied Nations’ agreed on a sytem of international monetary exchange that would promote stability, and enable the rebuilding of countries destroyed during the Second World War. This system was called the Bretton Woods Agreement. Essentially the value of the currency of each country was directly related to their reserves of gold, and each country agreed to ‘peg’ its exchange rate. Sort of..How it worked in practise was that the US dollar was redeemable in gold (for $35/oz), and other countries maintained their exchange rates by buying and selling US dollars.
In 1971, the US revoked gold-convertibility of its dollars, removing the world from the gold standard. In the years since, the world has operated under a range of fiat currencies, some fixed and some floating, but none with any tangible value. A piece of paper or plastic or cheap scrap metal.
Who Cares?
Well, nobody it seems. People have come to accept that fiat currency is worth ‘something’. Even more amusing is that >90% of the population (my figures) appear to think that their money has a fixed value and find ‘rising prices’ frustrating or unfair!Coming soon… how the absence of a gold standard affects the ability of asset prices to inflate at ratios greater than wage inflation and even increases in GDP …
hi foundation
very interesting post and thanks for it.
and will wait for the next bit it is very iteresting how these commodities do affect costs and you can’t know everything.here to help
If you want to get involved in some of the projects I’m involved in email to [email protected]
currently looking for up front money at 15% p/a pm me if you wishHi Foundation,
Have found your post really intriguing and eagerly wait the next chapter ,
[grad] thanks tony
Let’s review
Under a gold standard – the money supply can only grow at the rate thate god is mined and added to deposits. The total money supply = total gold in existance.
Under a fiat currency – the money supply can grow through the addition of money due to printing of new notes or through the addition of loans.
Under a gold standard – interest rates are determined by a true supply/demand situation. Higher demand for newly mined gold (fresh money) = higher interest rates.
Under a fiat currency – interest rates are determined by government or its proxy – in our case the Reserve Bank of Australia. Their goal, in an ideal world is the same as the gold standard – to price ‘new money’ at a value that promotes ‘deferred spending’ at a rate equal to money creation. They do not wish to promote excess money creation.
INFLATION, DEFLATION, HYPER-INFLATION and the Reserve Bank
Contrary to popular belief, inflation is not about rising prices. It is a reduction in the puchasing-power of money. This results in the illusion of rising prices.
Another widespread belief is that under our fiat currency, the Reserve Bank of Australia’s role is to prevent inflation. This is not true. In fact, there mandate is to keep INFLATION running at between 2 and 3 percent. Their true enemies are DEFLATION, a situation where assets and goods reduce in value over time, and HYPER-INFLATION, where the loss in purchasing power of money accellerates uncontrollably, effecting higher and higher prices….Measured inflation is sustainable. Prices rise, wages rise, asset values rise. All this is offset by rising productivity. We work more as the population expands. We work more efficiently as new technology allows our productive output to rise faster than man-hours.
In addition, inflation (over time) cures the ills of the boom-bust cycle that exists wherever man (or woman) with his (or her) many flaws exists. His (her) natural tendancies to simplify complex scenarios, to follow the herd, his (or her) greed and fear.
When capital is misallocated during an unsustainable boom, the present value of this misallocation is eroded over time. When the innevitable bust occurs, the losses are soon replaced by new capital, as inflation allows its creation.Inflation is sustainable. Prices rise, wages rise, asset values rise. All this is offset by rising productivity. We work more hours, the population expands. We work smarter and more efficiently as new nechnology increases productivity output per man (or woman) hour of work.
Inflation cures the ills of the boom-bust cycle that exists wherever man (or woman) with his (or her) many flaws exists. Wherever the natural tendancies to over-simplification of complex situations, the tendancy to follow the herd, the balance of greed and fear exist…
When capital is misallocated during an unsustainable boom, the present value of this misallocation is eroded over time. When the inevitable bust coccurs, the losses are soon replaced by new capital as it is created.When DEFLATION occurs, people stop spending. The incentive to buy now before prices of goods and assets rise is gone. In its place, spending is deferred (detrimentally), as people know they’ll buy tomorrow, next month, next year for cheaper than today’s prices. They don’t care about interest on their savings, as they’ll save money without any. This becomes self-referential. Prices are cut as producers and manufacturers chase sales. Wages fall as these same producers and manufacturers are forced to accept lower prices for their goods today. Soon prices are falling because people are unable to pay last weeks price. Under a fiat system, the Reserve Bank are powerless to encourage spending. They can’t lower interest rates below 0%, but prices continue to fall. Even printing more money is inneffective, as people just save it. Refer to Japan 1990 – 2006 for a perfect example.
HYPERINFLATION is nor a product of ever-increasing prices. It is the the result of rampant devaluation of a currency. The triggers are diverse and often political. Over-zealous public (political) spending, massive excesses of private debt etc. One thing is common – the supply of money grows faster than the domestic product of the country. Another element is required – increased aggregate wage demands that are met by employers. It is higher wages that enables the higher prices that in turn promote even higher wage demands. This can only be enabled by a ‘strongly’ growing domestic economy, or by reckless debt accumulation. And so, the Reserve Bank’s role becomes to dampen the economy and to deter reckless debt accumulation, by increasing interest rates.
In Summary
– Inflation is ‘good’, at a measured pace.
– Deflation is ‘bad’ and once in play, inflation is difficult to restore.
– Hyper-inflation is ‘very, very bad’ but the Reserve Bank (of Australia) has the means to halt/prevent it.BUT
…there is another factor to consider. Higher (or rising) interest rates are politically destructive (for both the RBA and Gov’t). They depress economic activity and output. Economic depression can result in a Recession (2+ quarters of negative GDP growth) or even a Depression and can lead to job losses, personal & business bankruptcy. AND due to ‘man’s’ fallible nature, to stave off a period of high inflation (with it’s hyper-inflationary risks, usually at the end of an irrational and unsustainable boom), the RBA generally needs to raise interest rates so high that a recession occurs simply to prevent hyper-inflation.So ends the lesson for tonight! I know we’re still a long way from an explanation of why a fiat currency allows House Price Inflation (HPI) in excess of wage / GDP inflation, but the next installment promises to wrap it all together.
Regards, F. [cowboy2]
Also up for discussion – full-reserve VS fractional reserve banking. And, consequently, the ‘velocity of money’.
PS – As always, I welcome a full and frank discussion. This writing is both cathartic and educational to myself – a way of clarifying my A.D.D.-style thoughts, if you will. Anything anybody has to add will be duly noted and add to my own personal understanding, and therefore be most welcome.
Always enjoy your posts Foundation. Looking forward to the next installment.
Juls
Ok, so here’s another installment. I thank you readers for all your comments, both positive and negative, posted and PM’d. This latest episode cost me 11 pages in the A3 notebbok and 4 cans of beer, so I welcome all kinds of feedback.
Last posting, we discussed Inflation, Deflation and Hyper-inflation. I wrote more last night, but didn’t reach my goal, so I’ll skip a few pages and get to my next installment. Please, bear with me. We can review the skipped episode later if interest is strong.
INTEREST RATES and the Reserve Bank
Interest under a gold standard is the price payed to creditors, that enables debtors to ‘rent’ their excess gold reciepts. Given a finite amount of gold, higher demand for debt results in higher interest rates. Supply and demand. This works well, as these same higher interest rates both encourage deferred spending (thus more capital becomes available to debtors), and disencourages excess debt by making it more expensive.
Under a fiat system, interest rates have much the same effect. Higher rates discourage borrowing and encourage saving. However, the feedback loop that ensures excess borrowing is met with higher interest rates is severed and replaced with the discretion of the reserve bank.
As discussed earlier, their mandate is to keep ‘inflation’ as measured by the cost of goods & services growing at a measured pace. This does not preclude excess debt accumulation, providing:
– this debt is spent on non-CPI goods and assets
OR
– if spent on CPI components, the market can suppy the icreased demand without raising prices.With regard to the explosion of debt levels in recent years, this has largely been the case. Most of the new debt has been spent on houses (a non-CPI asset). In addition, the increased demand for consumer goods has been largely offset by globalisation (lower wages producing more of the desired goods), and efficiencies of scale (more demand enables larger manufacturers who can afford better tech, and have more leverage over material supply contracts and lower over-heads).
So debt levels have undeniably risen by astronomical amounts, in the absence of CPI ‘inflation’. Yet this injction of new money HAS caused inflation in the true sense – the devaluation of the purchasing power of money. Sure, you can buy a mobile phone or digital camera for $100 where it would have cost $1000 ten years ago, or a $3000 plasma screen that’s better than the $30k one available 5 years ago, but…
For the average school/university graduate entering the workforce, the same things his/her parents bought, in total are much more expensive relative to his/her income.
This is not simply the product of immigration, government policy, CPI ‘inflation’, the GST etc, etc. Sure, some of these thinbgs have had a direct or indirect influence, but the net result is that he/she cannot expect to gain the same standard of living his/her parents did via the same proportional equivalent expenditure of income. Ergo, today’s dollar is worth less, and this is true inflation.
Now, to finally have a poke at the crux of the issue, which originated in another thread. How have house prices under a fiat currency managed to grow at a rate that averages much higher (2-3%pa) above the rate of wage inflation for the last 35 years?
If anybody has reached this point yet still believes such a situation can continue indefinately, I urge you to re-read my previous posts and/or entlighten me?! At least, let’s discuss the short-comings of my musings. For all others, we’ll continue.
Let’s travel back in time. All aboard the Foundation Magical Mystery Machine of Time Exploration (FMMMTE)! We’ll stop at 1885. Ancient history you say? Hardly. 121 years is only a few generations. My great-great grandfather was delivering milk (and sometimes emtying poop-cans) on the narrow streets and alley-ways of new Melbourne.
In 1885-ish the ‘Melbourne Land Boom’ was in full swing. Fresh money, mined as gold from the fields of Ballarat, Bendigo, Walhalla and hundreds of other tent-cities in the second half of the 19th century had brought prosperity to the city. Factories were modernising & industrialising. The miracle of electricity was beginning to reap rewards. Telephones, trams and railways were making urban and suburban living a realistic proposition. Land prices were subsequently rising. Everything looked rosy, and life was good, or getting better for almost all residents. Booming, if you will.
But then the boom turned into mania. It seemed that buying land was a better use of money than building factories, clearing farms, or establishing new businesses. The ‘mother country’ saw what was happening and soon English money flowed to Australia. ‘Land Banks’ were formed, with shares sold locally and in England. Politicians certainly invested in property, and misused their power – either manipulating infrastructure decisions (rail/light rail/comms) to flow near their properties or purchasing properties near where they knew these infrastructures would be built. But it wasn’t just foreigners and politicians involved; it was widely accepted that:
a) Property values never fall*; and
b) Prices would always rise more than the cost of borrowing** Interestingly, these ‘truisms’ still pervade our collective thinking today*
…Continued below…
…Continued…
In a few short years the total rated (read conservative) value of ‘Victorian’ properties had doubled, but this understates the real gains made by many property-speculators. Prices per square foot of street frontage in inner-suburban Melbourne had doubled, then quadrupled in just 5-7 years.
What many ‘investors’ (speculators) failed to realise was that this situation was unsustainable. They were using their capital gains, not by selling, but borrowing against the increased wealth held in their existing land / land-bank shares to invest further in land assets. A classic pyramid formation which could only last as long as an ever-increasing new base of ‘investors’ were willing to enter the game. This kind of pyramid formation is the basis for the classic ‘asset bubble’.
There was no fundamental, discernable cause of the bubble’s demise. Perhaps sentiment changed – perhaps prudency prevailed. More likely, all involved parties had reached their capacity to service additional debt. The house of cards finally collapsed in the early 1890s. Property prices fell on average by 50% and didn’t regain their previous levels for almost 20 years (until around 1909). Specific instances show that inner-city (ie Collins St) properties aroused no interest, even when asking prices were slashed by 70-80% from their peak (to 20-30% of their previous value)!
The ‘Land Banks’ took massive losses. Most failed, leaving shareholders and directors with massive, often catastrophic debt. The result was a huge economic depression, often considered to be more destructive to the country than the ‘Great Depression’ of the late 1930s and 40s. In some industries, job losses exceeded 50% of the workforce, and unemployment generally was widespread.
So that’s how a Boom/Bust scenario plays out under a gold-standard..
Let’s hop back into the time magine, and move forward to the year 1985, some 100 years after the collapse of the ‘Melbourne Land Boom’. Australia has now adjusted to life under a fiat currency after a bumpy start in the 1970s, where inflation in goods, services and assets played leap-frog with wage inflation until the early 1980s ushered in a period of relative stability.
This stability brought prosperity and confidence to the masses, aided by ralatively benign interest rates. Financial deregulation, a floated dollar and the inception of over a dozen new lending institutions provided an influx of new money, both domestic and from foreign sources. Our economy boomed. We were confident about our future. We borrowed to invest in the booming share-market and housing assets. Rising net-worth from business and house values made us feel wealthy, and we borrowed against these values to reinvest in more, more, more of the same!
Our fundamental belief was that we could borrow at low rates and reap the rewards of ever-increasing capital gains in the sharemarket, housing and commercial real-estate, and that these capital gains would always be greater than the interest costs. But we were wrong.
First the sharemarket went belly-up in 1987. But much of the smart money had already moved on to the ‘safe-haven’ of residential real-estate. The residential real-estate market faltered in 1989, but once again the smart money had moved to commercial property, which boomed. Eventually, in the early 90s prices per square metre of commercial real-estate in Melbourne fell by 30-50%, and the boom was over.
Several large lending companies and banks collapsed, some were bailed out by government. Westpac is a prime example of a near-miss (as a result of their lesson they have been far more prudent in their lending practises during the recent boom, positioning them in perhaps the best position to ride out any ensuing bust).
All told, some $20-30 billion dollars evaporated almost overnight as debt that would never be repayed. The cost was shared between depositors (Pyramid anyone?), shareholders, institutions and government. The excesses and subsequent losses ended in the ‘recession we had to have’.
But there’s a difference between these two events – the bust of the 1890s was left largely to sort itself out (under a gold standard), while the bust of the late 80s/ early 90s was interfered with ‘politically’. Like it or not, our ‘independant’ Reserve Bank is an arm of politics. They reacted to the early 90s bust (and the tech-wreck, 9-11) by lowering interest rates. On the one hand, this minimised the economic fall-out from such dire events. On the other, it prevented the bubbles from fully unwinding, and largely maintained what would have otherwise been unsustainably exuberant asset pricings in shares and real-estate.
Thus, under a fiat currency, controlled by the Reserve Bank of Australia, asset prices in shares AND real-estate have been allowed/enabled/encouraged to continue to inflate at a rate exceeding both aggregate wage growth and GDP growth.
So here ends my thesis. My point is, things look and work differently under a gold standard than they do under a fiat system. We have only endured some 35 years under fiat, so to project the capital gains from these few decades into perpetuity may be highly detrimental to one’s true wealth.
A Glance at the Future
In 2003, the RBA held a conference, under the theme of “Asset Price Bubbles” (I wonder why?). Submissions included reports on the ‘Melbourne Land Boom”, the “Poseidon Bubble”, the “1987 Stockmarket Crash” and the “Commercial property Bubble of 1990” or near-enough. At the time, a Mr Glenn Stevens, who is soon to take the reigns as the Reseve Bank of Australia Governer said of asset price bubbles:“I think it is generally accepted that, after an asset-price bust, the conductof monetary policy is going to involve easing, and quite possibly easing a lot. There is a potential issue of moral hazard here: namely that ‘bailing outʼ market participants in some sense will create further incentives to gear up in the future, to the detriment
of the economyʼs long-term stability. But Adam Posen argued that, in practice, the evidence for this has not been all that clear. Furthermore, I think when faced with a fi nancial system and economy in distress, one just has to incur that risk.“This should at the very least provide some surety to those engaged in the latest speculative real-estate boom that the Reserve Bank will act to prevent widely falling house prices by lowering interest rates and therefore temporarily perpetuating the inflation-fed (and creating) bubble that has supported otherwise unsustainable growth in house prices (and debt) over the last 25-35 years.
On the other hand, sentient readers will recognise that over the longer term, house prices (and the associated debt servicing levels) can only appreciate at the rate of wage OR productivity advances and will therefore not match the costs of borrowing over my lifetime. If they exceed this cost, beware, as an hyper-inflationary or deflationary event will become increasingly inevitable.
Regards, F. [cowboy2]
Wow, so many typos, spellos and excess commas. I swear it’s either the work of the devil or perhaps just the cans. Apologies to the grammar police.
In summary:
- there is a massive fundamental difference in the Australian economy post-1970 vs pre-1970
- 35 years is a very short time, economically speaking, and to project future asset prices based on gains from this period into perpetuity would be a folly
- Asset price growth cannot continue indefinitely to outstrip wage growth, else we will soon (in less than 30 years at current rates) be spending more on housing alone than the total of our wages. Which is impossible.
Thanks Foundation for a great post. I know alot of people will probably not agree with your thinking but I for one have found it absorbing and challenges my way of thinking. I always like to hear other peoples opinions and have taken alot on board from reading you posts.
Thanks Juls
So here ends my thesis. My point is, things look and work differently under a gold standard than they do under a fiat system. We have only endured some 35 years under fiat, so to project the capital gains from these few decades into perpetuity may be highly detrimental to one’s true wealth.Excellent F,
Now….down to the tin tacks….as I asked previously in one of your posts…..how do you propose to translate this undoubtedly impressive macro-economic knowledge into something tangible such that you (or anyone else reading it) can actually benefit from it.
I’m of the opinion (shout me down if you disagree) one cannot buy the national average of anything to do with any market……you must purchase….because individually we are all so small….small individual parcels of the “market” we choose to invest in, and these, to me at least appear to react differently on a micro level – to that which you speak of on a macro level.
What’s the next step chief ?? Where exactly does one plonk one’s hard earned ??
Hello foundation ,
Wow , I am drained from reading the history of the financial world of Australia. Your insight definately creates some personal thoughts that I can overcome.
Please dont take this comment offensively , but as an analyst or anlytical type have you ever invested? Please dont feel obligated to answer that question, but with in my experience the more left brain people are the less likelyhood of them making the leap across the river of fear into the world of investing.
You definately made some interesting points. Just some challenges for yourself to consider . How does can you explain Mumbai, London , New York . Bordeaux and even Mosman (NSW). The prices of real estate far outstrip the average income of the local economies yet the prices are telephone book numbers.
India up until 2 years ago had no lending facilities , they bought everything with cash. Some would argue this is why it is a 3rd world country , but bear in mind it has the largest middle class population in the world , it is actually bigger than the entire pop. of the USA (more than 350M) . An average home in Sth Delhi is about 3.5M Aussie dollars, a substantial home will fetch $20M+
World pricing parity has a major role to play as the balance of economies occurs during the next 20-30years. I believe as the manufacturing industry is absorbed by the likes of China and to a lessor extent India , world pricing will balance and become more relative to western countries.
I believe there is a simple formula for property, in conjunction with some basic considerations. As opposed to the share market none of us have the control of an institutional buyer that can dictate pricing with a simple buy/sell strategy.
The property formula is supply and demand.
More people = more property required + Increase in prices
ie Tasmania = future debarcle
Melb/Syd = 12-24 mth jump in pricing by at least 8%p.a for 5 years
Why ? population growth exceeds construction by 8000-14000 people p.a , this has been occuring for the last 2 years and is not sustainable . Will incomes accept a price rise? definately
The majority of people i know earn $100K+ , this in a large part are trades people. Rental pricing is dramatically increasing, average household numbers are reducing as people stay single longer or courteous of a divorce. To rectify the construction issue is not a simple process , planning issues and red tape holds back the ability to bring new stock into the market at short notice. The answer is buy in bluechip areas , hubs that people will always want to live in.
Last query for you , Do you believe we are on the verge of a deflationary period / bust?
cheers
Tony
PS I wish my great ,great ,great grandparents, were the idiots that bought Collins St property and it dropped by 70% and i was the poor sod who inherited that terrible event. (sarcasm intended)[biggrin]
I hope I am not reasponsible for sending you back to alcohol foundation[biggrin]. i enjoy your theories
cheers
Tony
[eh][freak][mad][lmao][thumbsupanim]”Let’s travel back in time. All aboard the Foundation Magical Mystery Machine of Time Exploration (FMMMTE)! We’ll stop at 1885. Ancient history you say? Hardly. 121 years is only a few generations. My great-great grandfather was delivering milk (and sometimes emtying poop-cans) on the narrow streets and alley-ways of new Melbourne”
Friggin’ Poetry![biggrin]
I have to say Foundation old boy, you have sufficiently challenged my belief of everlasting rising property prices against a static currency.
I would be fool not to consider that my own position could easily look to be propelling me to RICHES, yet this could just be a premature ejactulation in an economy potentially at the c.. c… cliffs edge.
Maybe so, HELL!! As an aussie(barely a whiff of a turd no-one Knows in the scheme of the worlds population) my own wealth may easily just be a boot-scoot to the left, (dammit I hate that song ACHY BRAKEY HEART).
Ricky Martin Sux ….. 10 weeks at number one in the charts is enough reason to trade up to being an eskimo ciitizen from the ARCTIC.
[blink]
OK, well………….. i am off to burn all the property I own. I relinquish the role of property investor and assume with relish the role of insurance claimant (slash) / ARSONIST..
Maybe I still have time to hedge my money…..
ha
butt seriously, Foundation. After all my excess steam blowing, Do you find that too much information may add to procrastination when buying into any market ! i’ve got my notepad… ok …. go.!!
TONY WJB, may i cal you wazza. I read your posts and thought “GEE , this guy seems down to earth.”
Then, I found out you were a sparky…. you lazy SOB!”
I’m an electrician too…. and hence disregarded everything you spat out your gab. You are over paid.[mad]
[
][thumbsupanim]Dazzles, ,,,,,,,,,,, (sorry…. I am on a ADD RAnt,,,,, )
Can you imagine if all the success and riches you have accumualted dissipated to less than nothing because of a new historical trend and an unexpexted world change. (IRAN and Nuclear world war for instance) EVERYTHING GONE in a few w… w… weeks because you never considered MAcRO MACRO reality.
[dunny][rock][dunny]
[smash]
Live, Learn and GrowLifexperience
ha
Live, Learn and GrowLifexperience
Hello Foundation
Thank you for the time and effort you put in on that answer for us.
A great synopsis of the economic history of Austrlalia. Economics not being my strongest point it will take me at least a couple more readings to even be able to ask an intelligent question on the subject or to question the conclusion you draw.
One thing I have noticed is that you are a man who puts his money where his mouth (or in this case brain) is. From another of your posts I noticed that you are taking action based on your conclusions.
On another thread you posted that you were in the process of selling your home under a sell to rent arrangement. STRing you called it, I believe. This certainly fits in with your theory that:-
a. House prices will drop
b. Interest rates will rise more than we expect.So I am also very interested in the answer to Dazzlings question a few posts back.
[b]
“What’s the next step chief ?? Where exactly does one plonk one’s hard earned ?? “[/b]Thanks again [smiling]
ElkaI retracted some of my last post as I was disrespectfully rambling on , and had way too many wineroonies, at the time.
sorry all!!
Live, Learn and GrowLifexperience
) development in monetary history occurred in 1944. The 44 ‘Allied Nations’ agreed on a sytem of international monetary exchange that would promote stability, and enable the rebuilding of countries destroyed during the Second World War. This system was called the Bretton Woods Agreement. Essentially the value of the currency of each country was directly related to their reserves of gold, and each country agreed to ‘peg’ its exchange rate. Sort of..
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