A $1.5T Wall of Debt Is Looming for US Commercial Properties
bloomberg.com
bloomberg.com
There's so much potential to invest in large productive infrastructure projects at the local, city, and state levels across the entire country. They could probably pump $1 trillion per state into the global economy starting with the local economy for real productivity gains and infrastructure gains everywhere. Brand new office buildings, brand new roadways, restoring nature as much as possible, investing heavily in building more housing, so on and so forth.
We should be good to resume QE sometime soon. It would be happening alongside real increases in the movement of commodities and labor productivity improvements across the board, and we would get the benefits of a massive rocket fuel boost to American innovation and American muscle once again by unblocking the huge middle class again so it can launch the next wave of new products and services.
There won't be a crash. We're just getting started.
People think that commercial property is in danger - nope, we don't have enough of it. We don't have enough skyscrapers, giant cities with modern advanced everything, advanced transportation that rivals anything else, etc. We need a lot of investment. If there were excess funds in the system still, they'd already be finding their way into these types of projects.
More money supply please.
We need to be building more skyscrapers, giant cities with advanced transportation. And preparing to settle the Moon, Mars, checking out Venus and Europa along the way to Pluto to verify if it is or isn't a planet.
These activities will produce many quality jobs and intelligent people for a strong reproductive base moving forward into the next 50 years.
There is no chance of hyperinflation even if they pump $50 trillion into economic activity, gradually over the next 10 years. Everything would compound from a productivity and efficiency point of view so much that it would just pay for itself.
As long as it actually goes to building better bridges and better roads and a modern electrical grid that is EMP-proof and completely clean and renewable and self-healing and advanced in every way. And space projects. You only risk hyperinflation if you're issuing debt that never does anything productive and thus your dollars lose their value reputation and it takes more for someone to part with a physical good or time locally or internationally.
American dollars aren't going anywhere because we're going to lead the next wave of tech innovation yet again, with a strong reproductive base compared with the competition. Plus we're already the leaders in space. Europe isn't going anywhere. Glad that our buddy Macron finally seems to have gotten through to our buddy Xi a little bit, maybe he'll finally make an actual honest effort to tell his buddy Putin to sit down and relax a little bit in earnest so that their currencies continue to be relevant, because at the rate we're going it's American tech innovation that's going to make the markets productive again to the order of an order of magnitude in new needed currency flooding the world's coffers in all denominations. Currency primarily backed by America yet again, and that's exactly how it should be considering the rate at which our competition seems to be pursuing nonsensical violence and wanton war instead of more innovation in renewables and space exploration and more.
It's not hyperinflation - it's gonna be hyper-financial-domination that's about to happen because everyone is going to want American dollars and American property and American business. With all the instability that war talk brings, nobody in China or Russia will want to reproduce at this rate. Even their existing reproductive base will shrink while the United States and Europe and Australia and India and Vietnam and Singapore and Taiwan and Japan and the Philippines absorb Brain Drain to scoop up the talented people who can leave. Our reproductive base can be recovered still, whereas the competition will have a much harder time.
American dollars are not at risk of hyperinflation. Neither are Euros. They should aggressively invest in infrastructure projects and anything else they need now because their currencies are going to become even more sought after. More dollars and more Euro right now would be a colossal tide lifting all the other boats at the expense of the competition that is losing its currency stability and reproductive base stability the longer it tries to saber rattle over stupid human ideas instead of pursuing higher order thinking objectives.
Edit, 1976
The inflation given that context is not that bad all things considered.
> There is no chance of hyperinflation even if they pump $50 trillion into economic activity
Good lord. Buy Bitcoin guys, this is what some people really think..
Even the eagles must land to see what is going on.
If you give investors free cash, will they build the tens of thousands of kilometres of high-speed rail we deserve so we can have a coherent multi-mode transport network, which leads to realignment of urban planning on a decades-to-centuries scale, and has no chance of turning a dime of profit until 2060 at least, or do we toss at into some crypto/AI/buzzword-du-jour sizzle reel that promises 500% returns in six months?
We actually need state-level thinking and intervention, because they're the ones who can say "we're thinking beyond the next fiscal quarter" without a stockholder riot.
Future generations get the benefit of the asset too, either directly, by driving over a bridge, or indirectly by growing up in an environment of greater GDP. So purchasing the asset out of direct taxes during the years it was built is foolish.
Also the macroeconomic implications of government debt are quite different from the microeconomic impacts of personal or corporate debt. For example foreign governments are pretty much obliged to buy US sovereign debt and in exchange the Fed is pretty much obligated to issue it. That ripples through all sorts of things but in general is quite favorable to the US.
Of course the second paragraph requires good choices for investment, i.e. more nuclear weapons is probably a bad choice, but bad choices like that are frequently made.
It all feels brittle.
I’m definitely misunderstanding something.
Inflation would cheapen debt. Since wages have not caught up to productivity yet, we can see increased wages alongside the inflation which makes the real amount of consumer debt lower than it seems.
It works out in the long run because we're behind on productivity gains affecting wages in many sectors, but that has been improving especially since 2020.
Most orgs hold debt, too. A rising tide would lift all boats in this case.
If i'm understanding your description, it incentivizes holding debt?
For a massive amount of Americans significant devaluing of debt would be life changing in a positive way. Little to lose and lots to gain.
how?
Right now, wages in the US are much higher than most other parts of the world, but the fundamentals behind that are quickly disappearing. If I can hire equivalent talent in the US for $100k, EU for $50K, and Asia for $10k, that's a market friction. It's slowly levelling out.
As that's happening, and cheap goods / services from outside the US are no longer cheap, our purchasing power goes down.
It’s always worth remembering that future cash flows aren’t guaranteed. The idea you can leverage fractions of a percent returns between loans and cash flows creates a great deal of fictional wealth that’s going to collapse at some point. Adding some real volatility to the financial system is critical for long term stability just as testing backup systems when you aren’t in a middle of a crisis.
Definitely it pushes other countries to dump USD reserves faster
I don't think they are gonna like to fund American infra with their money
https://europeanconservative.com/articles/analysis/silicon-v...
It’s great for fixed rate things on stuff that appreciates with inflation (eg, mortgages) but inflation is going to super hose people that have variable rate loans on nothing tangible.