Obama's budget, bad for savers, good for inspectors.

[Nick Gromicko]

The president’s projected $1.65 trillion deficit for the current year will be the highest ever, surpassing the $1.41 trillion deficit hit in 2009. It would also represent 10.8 percent of the total economy, the highest level since the deficit stood at 21.5 percent of gross domestic product in 1945, reflecting heavy borrowing to fight World War II. For the first time, servicing the national debt will cost more than national defense.

Only one way out: Hyperinflation. And with all the money sitting on the sidelines and no place to go, it will pour into hard assets like real estate looking for a hedge. I believe this is the Fed's master plan. Print our way out of debt. Bad for savers (as their fiat money will have less purchasing power). Good for inspectors (as everyone will try to get out of dollars and into hard assets like real estate).

[Brian E. Kelly]

Interesting Nick...

[Nick Gromicko]

There is also something else going on. The Russians and Chinese are quietly and slowly dumping dollars. This means the Fed is going to have step in for them, which means more printing, which means more inflation, which means more rush to hedge, which means more real estate buyers, which means more inspections... lots more.

There is an outrageous amount of money sitting on the sidelines with no place to go but toward hard assets like real estate. If it stays on the sidelines, the value of this cash heads south. It has to move toward real estate. Not a lot of options.

[Bruce A. King]

We could use a short course to give out to real estate investors.

They range from those that buy 10-20 houses all at once with zero inspections to some that buy one house and think its just going to need carpet and paint and want to pay $200 for an inspection that comes with a lifetime warranty.

[Nick Gromicko]

The Germans used their dollars to buy the NYSE today.

[Brian E. Kelly]

Originally Posted by gromicko

The Germans used their dollars to buy the NYSE today.

I saw that. hmmmmm

[Michael Larson]

Originally Posted by gromicko

The president’s projected $1.65 trillion deficit for the current year will be the highest ever, surpassing the $1.41 trillion deficit hit in 2009. It would also represent 10.8 percent of the total economy, the highest level since the deficit stood at 21.5 percent of gross domestic product in 1945, reflecting heavy borrowing to fight World War II. For the first time, servicing the national debt will cost more than national defense.

Only one way out: Hyperinflation. And with all the money sitting on the sidelines and no place to go, it will pour into hard assets like real estate looking for a hedge. I believe this is the Fed's master plan. Print our way out of debt. Bad for savers (as their fiat money will have less purchasing power). Good for inspectors (as everyone will try to get out of dollars and into hard assets like real estate).

You cannot have hyper inflation without a means of getting more dollars into wage earners hands to spend.

Hear of many raises in this employment environment?

If you start seeing union demands for large pay increases and anyone stupid enough to pay them. Look Out. But until then not likely to see hyper inflation.

With a 10% "official" unemployment rate and a real one of over 16% that is hard to imagine significant wage hikes.



This ends today's economics lesson.