House of Horrors

April 30, 2014 by

Good afternoon,

Great article on what the eagle-eyed and pigeon-toed have got as their major worry at the FOMC tonight…… housing.

I would just like to add that it is their own fault…QE gets poured into a liquidity trap: banks don’t lend, wages stagnate, inflation doesn’t go up, but house prices stay high or at least out of reach. That’s where the problem lies. As much as I appreciate the rich folks allowing a little of their wealth to trickle down, this idea is a bit of a joke: it doesn’t trickle anywhere but the Cayman Islands. The Fed can try and pump as much money into the economy as possible but if the banks don’t lend and wages don’t rise (because that would hit profits and people aren’t dying in the streets yet, are they?) the hundreds of millions of consumers that drive the economy in the US can’t play their role. And with something as big and scary as an (expensive) house purchase, whaddya expect?