re: Lets talk about the housing bubble

I’ve been making the argument for years that we were in an inflation bubble above all else and in danger of a fiscal cliff second.

Bush did $1 trillion in the “too big to fail” bailouts, then Obama did $5 trillion more in the QE (not really QE) “Stimulus”, which was just code for “bailing out ~900 companies and banks”, which isn’t how QE is supposed to work.

In that time, they only allowed inflation/CPI to go up 13.4% even though we literally doubled the M2 money supply. (hence the bubble)

IF Hillary would have won and essentially continued the Obama economic agenda of over-regulation, anti-business, high corporate and personal taxes, trade deals resulting in deficits, mass corporate inversions, pro Dodd-Frank, consistent expansion of social welfare, < 2.0% annual GDP growth, plus continued massive deficit spending, which all would have required them to continue forcibly holding interest rates down, we would have gotten our credit downgraded again and the inflation bubble would have turned into a full blown global currency/Dollar bubble too.

In other words, we likely would have gone over the fiscal cliff, which would have been a catalyst for hyper-inflation as the value of the Dollar plummeted. This time sending us into a massive Depression.

Another bout of QE wouldn’t have saved us, but this is what she would have done to attempt to save her Presidency instead of going America-first protectionist populist pro-business and lowering taxes. Dems simply don’t do that shite. Borrowing and spending at the expense of the future is all they know. But that’s exactly what would have caused the collapse, and set us up for an even bigger one down the road yet again.

But luckily that didn’t happen. Trump’s economic agenda is the exact opposite. Businesses have money and are less leveraged. Consumers have money, jobs, and growing wages. Companies home and overseas are investing trillions in the US over the next few years and beyond.

The bubbles have been staved off.

The other big difference is supply and demand. Inflation not only goes up because of QE and adding physical dollars into circulation, but also because demand for goods and services extends higher than supply.

Right now, supply and demand are in harmony. Actually, supply is higher than demand, but the QE/Stimulus under Obama bailed out that debt from excessive supply, so it’s virtually a non-factor.

Banks and lenders aren’t handing out interest only ARM’s with giant balloons to anyone with a 450+ credit score anymore. Fannie and Freddie in cahoots with the banks and ratings companies aren’t burying shitty loans inside over-rated loan tranches while running a Ponzi Scheme any longer.

As a result, also, hyper-inflation isn’t a factor or concern anymore. Meaning the Fed doesn’t have to drastically raise interest rates.

We still do need interest rates to go up for the simple fact inflation was held down too much during the last 8 years while doing absurd QE, but it doesn’t need to be drastic.

This is why we will only see 0.25 basis point bumps for 2-3 quarters of each year over the next few years. And they will probably even stop after +2.0% and take 4 years to get there.

Saying we will reach 9.0% just isn’t realistic. It’s no longer needed to stave off economic threats or prevent a bubble bursting or a cliff dive.

We aren’t going to get downgraded if our GDP growth is averaging 3.0%+, and we aren’t going to pop a bubble if interest rates increase at virtually the same rate or less than the increase in consumer take home income.

And with the take home increase from tax cuts and wage growth, that’s not going to be an issue. Supply and demand, even in the housing market, should continue being in harmony for the foreseeable future if we continue on this current economic agenda and path.

TLDR version:

If Hillary won, yes, inflation/interest rate/currency bubbles and fiscal cliff were almost a certainty to have burst and caused a collapse.

Trump won and his economic agenda is staving off the threats. Rates will go up gradually and slightly at an acceptable pace to consumer take home income.