Who's responsible for this mess?

In general, I agree that average is not always the best when comparing (median is often more accurate and is what tends to be used by academics).

It was specifically in response to Clyde who is arguing against a small pay rise for the lowest paid in our country.

This has been in the news as it’s an election issue - and a pay rise is supported by some academics too.

 

I personally don't support any broad based pay rises for anyone unless they've earned it.

 

So my cheque is in the mail .

 

I know Just another whinge for today.

 

Thanks. I'll be waiting for it. Cost of smashed avo at Bondi Beach has gone up 10% .

 

Besides which, tulip mania was mostly a myth.

Cheers,
Inertia

 

It works in Civ IV. If you don' build stadiums your population becomes unhappy, productivity decreases, and there's a chance of revolt.

Cheers,
Inertia.

 

How so?

 

Printing money does not cause inflation

not necessarily.

Cheers,
Inertia.

 

There was a lot of build up to get to that point though.

The slaves in America didn't free themselves. Those in power freed the slaves, and it had to be economically palatable for their constituents for the politicians to be able to get it through and survive politically afterwards.

Britain is a slightly different story - there was a fair degree of personal interest by England's most powerful judge - largely due to his nephew's illegitimate daughter, who lived at Kenwood House when she came to England. His ruling in the James Somerset case was what promoted the move to abolition, but again, there had to be economic viability to support the widespread support.

Cheers,
Inertia.

 

Interesting - thank you. The article is saying that because production collapsed, the same amount of currency covered a diminished number of goods, and this is what lead to the inflation during the American civil war.

Possibly, but not sure that this is correct based on what I have read. I could be wrong. Again, the Continentals were printed into oblivion to fund the conflict.

I actually thought that the article was going to say that printing money isn't enough - you need velocity as well, which is also true.

I always come back to Milton Friedman's quote that, "Inflation is always and everywhere a monetary phenomenon."

F A Hayek said the same thing in the 1970's when he was asked how to stop the inflation, he talked about "stopping the printing presses".

Appreciate the article and the different perspective. Thanks.

 

"In fact, “There weren’t that many people involved and the economic repercussions were pretty minor,” Goldgar says. “I couldn’t find anybody that went bankrupt. If there had been really a wholesale destruction of the economy as the myth suggests, that would’ve been a much harder thing to face.”
Read more: There Never Was a Real Tulip Fever | History | Smithsonian
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Cheers,
Inertia

 

It is a concept I struggle with, and don't necessarily completely agree with. I similarly always held the belief printing money increased inflation directly. My understanding of this modern perspective is with the introduction of fiat currency, that relationship between printing money and inflation is no longer direct.

Cheers,
Inertia.

 

And to add to that, I think it becomes a bit esoteric and a little bit of a moot argument. Government prints money, government uses money to buy more stuff, government therefore contributes to inflation - as opposed to government prints money, increased volume of $$$ dilutes the value of the gold reserve...

Cheers,
Inertia.

 

and number 1 wo

Banks were part of it. As more money they lend, more money they make.

Bubbles are caused by speculation. From 2013 to 2018 there were lot of investors in the housing market and when investors see that they can make a return of x% every year (which was happening average 8-12% or more every year any suburb) they don't care how much they are paying for the asset, even if the underlying asset has no value or overpaying above market value because mentality is someone else will come and buy that asset from them at higher price.
When investor is out of market end user of asset remains who looks at if they can afford (make repayments etc.) the asset, growth becomes secondary.

 

Well you still need the quanity of money to go up for there to be a bubble. Without a monetary inflation, a bubble in one area, would just draw currency away from other assets causing the other assets to fall in price. You need monetary inflation for the sorts of bubbles we have seen in the last 100 years.

So getting back to the core question: seems that people believe overwhelmingly that regulators, including the RBA and APRA caused the boom, and then the fall in house prices. Sounds about right to me.

 

I don’t think the current modest declines are a crisis. The blowing up of the bubble was the real crisis due to the risk of the bubble blowing up and the associated financial system issues - so far there has been an orderly decline in prices.

I look at rental yield as the main measure of the extent of the bubble. House prices and rents have both been declining in Sydney, but prices have been declining faster than rents so yields have increased slightly. Gross house yields are now 3% - a number of 5% is probably reasonable to give a decent investor return after costs. This implies a further 40% fall in house prices in Sydney, assuming rents don’t fall further, which is a big assumption.

SQM Research - Property Gross Rental Yield - Sydney NSW

 

A further article by Bill that I haven't read for a couple of years. Interesting to read with Australia's current situation.
Quantitative easing 101

You are saying the boom is caused by the supply side (of $$$), but there is also the demand side to consider. The massive immigration (mostly in to Sydney and Melbourne) has been the driver here...

Cheers,
Inertia.

 

The media is also a business that relies on advertising dollars from the property industry to stay alive.

If you don’t think the media has shilled for their pay masters for years now you haven’t been paying attention.

As someone else remarked around here, you have to come to this place to get decent analysis of what is actually happening in the market.

Meanwhile, the West Australian newspaper prints quotes from people who make their living selling houses urging people to buy houses and pass it off as market analysis.

To understand why, one need only look at who is taking the ads out in the same paper.

 

Everyone deserves the right to an increase inline with inflation or else your taking a paycut.