i sure hope you're not saying my pt was silly. i think we're saying the same thing. think about it, if you feel HI is right around the corner, the best thing to do is to go out and take out the largest most leveraged loan you could get, typically a mortgage (most favored tax haven), and buy as many houses as possible. the banks got seriously hurt in the 1970's by giving out too many easy RE loans which got inflated away. this is one of my critical pts; they aren't going to repeat this mistake by leveraging up and spraying USD's all over the economy. and if you don't get HI, how is gold going to go to the moon?
Yup, that would be the most rational thing to do if you were sure that inflation was coming. Not even hyperinflation. Just regular old steady inflation of more than about 4 or 5% would be enough to make that a profitable play.
My point was that even if Jesus himself showed up in person to tell everyone that hyperinflation would be starting in a month, housing would not be the place that most people would go to, because they are still smarting from the hard spanking they just got.
Because of that, the chart of real estate loans can't really be considered evidence that people don't expect inflation. I have a habit of picking on bad arguments, particularly ones that are made in support of a view that I favor.
but this is a major pt in favor of deflation. there was no greater amt of leverage poured into an asset class of the system by the plebes than residential RE. those 69% of Americans (peak housing participation rate) that bought anywhere btwn 1999 or so and 2007 are screwed into the biggest debt instrument of their lives. they won't be coming to the gold or HI party.
The government has been spending like mad, and the Fed has been monetizing everything in sight to offset the credit collapse. I see both of these
are as being more dangerous than consumer or commercial credit.
Consumers and businesses have at least some notion of their own limited creditworthiness. They feel some restraint, while government has barely any.
Hyperinflation won't be kicked off by private borrowing. When everyone is borrowing, the flood of new money creates inflation, but it also prevents the lack of faith in the system that is the fundamental difference between inflation and hyperinflation.
And I see a lot of low level civil unrest around the country. From the protests in Wisconsin a while back, to the occupy X movements. But I mostly see them as people that are unwilling to take on more debt personally, but still want the benefits of free money, so they want government to acquire the debt for them.
And government borrowing sure can cause hyperinflation. Just not today.
Edit, 2011-10-06 14:01 CDT: are -> as