> and yet we will continue to believe the people making the incorrect predictions, especially when they reinforce our worldview.
I take Krugman’s advice with a grain of salt. In 2002 his suggestion was
“To fight this recession the Fed needs…soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”
I wouldn’t care but he was the type of thinker who caused people to say Ron Paul was a kook, who warned that the housing bubble was going to burst a couple years before it happened.
Asset inflation is most definitely occurring due to the increase in monetary supply. If I’m sitting in 100k in capital that I’ve saved by being frugal over the last 5 years, it is effectively becoming less and less valuable so I’m forced to spend it on some kind of asset not in hopes that the asset becomes more valuable but because my 100k is becoming less valuable.
To be fair there is much increase in home prices not due to inflation and more due to increased demand with the changes covid brought on.
And here is the legal crime that it brings about, I bought my current house with only 5% down for 350k and it would probably sell now for 390k, meaning my 20k of my frugally saved capital will have a 100% return in one year. You could argue if it lost 10% I would lose 100% of my invested capital but I bought right after I saw Trump turn on the printing presses so I was 99% sure this wouldn’t be like me buying a condo at the end of 2007.... shudder