House mortgages

[Ab7]

Does it matter how low interest rates will be if deflation slashes asset values.

You will need low rates to pay off assets worth a percentage of former values.

Bubble pop.

Disagree farma,
With rates at zero, the only asset going down in value is , Canadian dollars in there infinite supply.

[AlbertaFarmer5]

Does it matter how low interest rates will be if deflation slashes asset values.

You will need low rates to pay off assets worth a percentage of former values.

Bubble pop.

The great depression has been studied for 90 years. Economists believe they know what caused it to be so deep, and so prolonged, and they know how to avoid it. And for 90 years, money printing has successfully postponed a deflationary spiral of that magnitude. I wouldn't hold my breath for the next one, although it will be of monumental proportions when it does occur.

[Austrian Economics]

Does it matter how low interest rates will be if deflation slashes asset values.

You will need low rates to pay off assets worth a percentage of former values.

Bubble pop.

As long as interest rates continue to fall, asset prices will keep rising. When fiat currency is in the falling cycle, there is simply no mechanism to arrest and reverse the fall.

[Austrian Economics]

Watch rates go lower yet. At what point do you just borrow as much as possible when you can lock it in at 1.5% rates?!?!

Rates will go lower, but asset prices will continue to rise. Your ability to borrow will be capped by your cash flow. You will be able to afford to buy smaller and smaller units of land as their value rises and margins on farming continue to be squeezed.

[Austrian Economics]

It is possible that asset prices will crash, but only if central banks get stubborn about holding the zero bound in interest rates. If they accommodate the trend to negative rates (which I am certain they will) asset prices will soar to levels you can barely imagine. But the negative side of the falling cycle creates problems of a different nature, the primary one being the destruction of capital goods caused by excessive wear and tear on plant and equipment that outstrips the ability of firms to borrow fast enough or big enough to replace them. Another major one is the absolute destruction of fixed income instruments accompanied by the collapse of most pension plans.

[farmaholic]

As long as interest rates continue to fall, asset prices will keep rising. When fiat currency is in the falling cycle, there is simply no mechanism to arrest and reverse the fall.

"Continue to fall"? ......where?

Aren't we nearly at the bottom already?

Please explain

[farmaholic]

Ab7, Albertafarmer5, Rareearth, Austrian Economics....

I have no idea and unqualified to comment, so probably shouldn't have made he first one.

Maybe its good we live inna world of digital transactions so we don't have to carry huge volumes of cash or huge denominations of worthless bank notes.

[AlbertaFarmer5]

"Continue to fall"? ......where?

Aren't we nearly at the bottom already?

Please explain

0 is an arbitrary value, Much like zero Celsius or zero Fahrenheit. If you live in Tahiti,0 Celcius seems like a reasonable floor, not so much in Saskatchewan.

I have two mortgages sitting in floating rates. I turned down 2.39 for 5 years. I'm betting on rates going negative, not betting that they will trickle dow to the rates I pay, but closer to 0 than where they are now.

[Austrian Economics]

"Continue to fall"? ......where?

Aren't we nearly at the bottom already?

Please explain

In fiat currency, interest rates can and will go negative. They already are in Denmark and Japan. There is no "bottom" in irredeemable fiat currency.

[errolanderson]

We are now in full-blown economic collapse . . . .

The duct tape holding the current shurrod called the stock market is unravelling. And the Fed is now in desperation mode. Any inflation attempts will be met head-on with mass deflation and writeoffs as the money printing gig totally runs out of gas and ultimately fails. Welcome to 2021 . . . .

And the gloating about the record August equity gains makes me nauseous . . . because the incoming fallout in markets will be staggering as a result.

It’s all about greed and manipulation. But economic reality will dictate the last man standing . . . .