Central bankers are often revered as the captains at the helm of the global economy. It’s as if their actions dictate the trajectory of the future
They say it can’t be done, but here at Money Morning we attempt to broadly forecast what’s coming next for the economy.
Once you understand the underlying forces which drive the economy, you will have access to insight that few people ever attain.
It has less to do with the movement of central banks or the stock market. Or movements in interest rates, inflation, or some other mechanism.
It’s based on the real estate market.
What happens in the real estate market underlies the economic cycle. And the cycle simply continues to repeat.
Property Markets History
A man by the name of Homer Hoyt identified the repetition of this real estate cycle in a book written back in 1933, called ‘One Hundred Years of Land Values in Chicago.’
A study of history as Homer Hoyt did it, with a focus on land values, proved the economy moved in a very clear sequence of roughly 18 to 20 year cycles.
It’s directly related to land price and it repeats regardless of government policies and the type of government in power.
And nothing has changed since Homer Hoyt wrote the book in 1933. The real estate cycle simply keeps reaffirming itself.
The financial reforms initiated after the global financial crisis, have only guaranteed yet another real estate cycle, as that crisis was not financial in nature.
It was a land crisis
And whilst the underlying cause of the cycle is ignored, the real estate cycle must repeat.
These signs may just be the prelude to a seismic shift that’s beginning to rattle the economy, both here in New Zealand and around the world.
New technology, better ways of doing things, all feed into a rising land price. And then people start to speculate in it. And there’s your cycle.
You never get the full story in the news. You read about Auckland property values easing off. A decline in confidence. Then you put your ear to the street.
There are three important decisions in life: What you do…with whom you do it…and where you do it. What. Who. Where. Keep it simple.
Claptrap comes in many guises and disguises. Sometimes, it is based on inconsequential error. Sometimes, it is just bad judgment.
Keynes’ prediction never came to pass. We still work 40 hours a week on average. And toil harder than ever before. Those gains in productivity are real. But where did they go?
In New Zealand, we have one of the largest fishing zones in the world. 4.1 million square kilometres. And a low population base. This provides a competitive advantage.
This is not science fiction anymore. Companies are making and delivering 3D printed houses to the market place, now.
You can never lose money with real estate. This is something you have probably heard often. But trust me, you can. Just ask the people in Japan.
What does investment in real estate have to do with tax on cigars? Legislation creating a real estate investment vehicle was signed in the extension of excise tax on cigars.
A sad day in Paris. In this, the holy week of Christendom…one of its most sacred and beautiful monuments caught fire.
With bitcoin, we believed it would go mainstream. An alternative to fiat currency that could hold its value like gold. This was an idealistic dream.
In our offices or workplaces, everyone starts catching something. We dread the moment, but we know that we’ll inevitably get sick too. In housing, we’re seeing our peers starting to look a bit green.
Glancing in the window of the local Immobilier, I noticed several good-sized homes for sale on large plots from around €100,000. I started to think about our former life in Auckland and why it was…