Comments on: Hyperinflation or Prolonged Deflation? Coping and Investing Strategies For Either Scenario http://millionairemommynextdoor.com/2009/06/hyperinflation-or-prolonged-deflation-coping-and-investing-strategies-for-either-scenario/ A self-made millionaire shares her recipe for success, happiness and financial freedom Wed, 01 Sep 2010 02:32:15 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Ernest http://millionairemommynextdoor.com/2009/06/hyperinflation-or-prolonged-deflation-coping-and-investing-strategies-for-either-scenario/comment-page-1/#comment-3257 Ernest Sat, 05 Jun 2010 20:26:40 +0000 http://millionairemommynextdoor.com/?p=609#comment-3257 I'm counting on long term deflation, but prepared for inflation as well. Right now I have a lot of money in TIPS (Treasury Inflation Protected Securities) which rise with the CPI in inflation, and hold face, or par, value in deflation. However, I am looking at other income sources that I never considered. For example: A local credit union is paying 4.51% interest on a maximum of $25,000 high yield checking. That is an extra $1,100/year for an account which is liquid and guartanteed. Stuff like that. You have to shop around, but it beats working! Meanwhile, I continue a very low cost lifestyle. My wife and I enjoy beach walks, which are free, unless you live in most of the country where that is what you do on an expensive vacation. So it is all relative. I’m counting on long term deflation, but prepared for inflation as well. Right now I have a lot of money in TIPS (Treasury Inflation Protected Securities) which rise with the CPI in inflation, and hold face, or par, value in deflation. However, I am looking at other income sources that I never considered. For example: A local credit union is paying 4.51% interest on a maximum of $25,000 high yield checking. That is an extra $1,100/year for an account which is liquid and guartanteed. Stuff like that. You have to shop around, but it beats working! Meanwhile, I continue a very low cost lifestyle. My wife and I enjoy beach walks, which are free, unless you live in most of the country where that is what you do on an expensive vacation. So it is all relative.

]]> By: Bruce Norris http://millionairemommynextdoor.com/2009/06/hyperinflation-or-prolonged-deflation-coping-and-investing-strategies-for-either-scenario/comment-page-1/#comment-3112 Bruce Norris Mon, 26 Apr 2010 05:43:32 +0000 http://millionairemommynextdoor.com/?p=609#comment-3112 I agree with the deflation camp. My company buys and sells property in California. With unemployment very high and mortgage delinquencies at all time records, who will be buying the millions of vacant homes nationally that are about to occur? Investors can't get financing, so you are stuck selling houses to the all cash buyers at below replacement cost or first time buyers who buy entry level housing. {50% of the market is first time buyers and another 20% are all cash buyers in California.} In the past 12 months mortgage delinquencies have doubled in California while foreclosures have been cut in half!? The banks are often not even beginning the foreclosure process on people, allowing them to get 12-24 months behind before filing the foreclosure. In addition, what is about to occur in Southern California is an avalanche of homes being foreclosed on by lenders where the mortgage exceeds 1 million dollars. In Riverside County alone, there are about 2,900 3,000 square foot homes or larger scheduled for the court house steps in the next 60 days! You are about to have the most fantastic houses in our area sell for $125.00 a foot. {Try to repalce a 6,000 square foot custom home on an acre fully decked out for $750,000}. This puts pressure on the 4,000 square foot house etc. The lots in these areas used to sell for $600,000 or more. Every week over 100 million dollars of land loans go through the trustee sale process without any bidders. The lenders who lent all of this money are temporarily holding something that today is usually absolutely worthless. I don't see how California makes an economic comeback with the building industry unable to compete with the existing price structure for housing. No building, no improvement in unemployment, no improvment in unemployment, no migration back to California. No migration back to California, no excess demand for real estate. No excess demand for real estate, no upward pressure on prices. In some cities in Riverside and San Bernardino Counties, 60% of the owners are upside down. If prices do not rise soon enough, more of these owners will walk away and do a strategic default. This would cascade even more inventory into the banks and create an even lower pricing structure. The California market is beginning to give signs of improvement, but this has occurred only because of a shortage of inventory. That shortage of inventory isn't real and could change at the drop of a hat {or the next government policy change}. I agree with the deflation camp. My company buys and sells property in California. With unemployment very high and mortgage delinquencies at all time records, who will be buying the millions of vacant homes nationally that are about to occur? Investors can’t get financing, so you are stuck selling houses to the all cash buyers at below replacement cost or first time buyers who buy entry level housing. {50% of the market is first time buyers and another 20% are all cash buyers in California.} In the past 12 months mortgage delinquencies have doubled in California while foreclosures have been cut in half!? The banks are often not even beginning the foreclosure process on people, allowing them to get 12-24 months behind before filing the foreclosure. In addition, what is about to occur in Southern California is an avalanche of homes being foreclosed on by lenders where the mortgage exceeds 1 million dollars. In Riverside County alone, there are about 2,900 3,000 square foot homes or larger scheduled for the court house steps in the next 60 days! You are about to have the most fantastic houses in our area sell for $125.00 a foot. {Try to repalce a 6,000 square foot custom home on an acre fully decked out for $750,000}. This puts pressure on the 4,000 square foot house etc. The lots in these areas used to sell for $600,000 or more. Every week over 100 million dollars of land loans go through the trustee sale process without any bidders. The lenders who lent all of this money are temporarily holding something that today is usually absolutely worthless.
I don’t see how California makes an economic comeback with the building industry unable to compete with the existing price structure for housing. No building, no improvement in unemployment, no improvment in unemployment, no migration back to California. No migration back to California, no excess demand for real estate. No excess demand for real estate, no upward pressure on prices.

In some cities in Riverside and San Bernardino Counties, 60% of the owners are upside down. If prices do not rise soon enough, more of these owners will walk away and do a strategic default. This would cascade even more inventory into the banks and create an even lower pricing structure.

The California market is beginning to give signs of improvement, but this has occurred only because of a shortage of inventory. That shortage of inventory isn’t real and could change at the drop of a hat {or the next government policy change}.

]]> By: Mule Skinner http://millionairemommynextdoor.com/2009/06/hyperinflation-or-prolonged-deflation-coping-and-investing-strategies-for-either-scenario/comment-page-1/#comment-3034 Mule Skinner Mon, 15 Feb 2010 20:02:55 +0000 http://millionairemommynextdoor.com/?p=609#comment-3034 Wouldn't gold also serve during deflation? Of course the number of dollars per ounce will decrease, but the purchasing power per ounce should hold steady. Wouldn’t gold also serve during deflation? Of course the number of dollars per ounce will decrease, but the purchasing power per ounce should hold steady.

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