Friday Update February 11, 2022

253 existing single family homes available for sale today.  Flat over last week and absolutely dismal levels of inventory which continues to provide the fun and excitement of multiple offers on many listings.  

MLS wide we've already seen 316 sales in February which I can't believe is almost half way over.  Our median sold price jumped right back up to, wait for it, $450,000.  Can we break that at some point soon?  Average sold price is over half a mil and the sold to list price ratio is back up over 101%.  No slow down.

Rates have gone up considerably as I went over in detail last week.  Mortgage applications dropped by like 10% which didn't take enough people out the market to make a difference.  We saw substantial volatility in rates over the last couple of days as the propaganda machine keeps beating the drums of war.  You may think of some kind of free media but the garbage 90% of you call news is nothing more than privately owned propaganda.  But it gets you all hyped up and emotional and that's exactly what good journalism is supposed to do right?  Get you to fall in line.  One of 2 carefully created lines that you get to fall into, neatly, single file please.

 You need to understand that in the United States the main crisis that contributes to the majority of our other problems is the fact that we consume more than we produce.  Like lets say your family makes $100,000 a year but spends $120,000 a year.  You would have problems rather quickly right?  We do that same thing as a nation and we continue to devalue the debt by printing more money. Rather than facing that crisis at its face value and dealing with it we search for scapegoats.  Like those WMDs in Iraq that we're still looking for, you know scapegoats like that. 

Do you find it weird that the moment we start getting some good news about the last crisis we are force fed a new one?  There can never be a break from crisis, if its not the rona its the Ukraine, if its not that its the financial this, the China that, the shortage of this that and the other.  Couldn't we just have a moment to chill for a bit?

No we can't chill for a bit.  Because if we just chill and take time to reflect on what's been going on we might realize we're on a financial hockey stick.  And an upset public that has a clear vision of exactly how it's getting fucked might get a bit unruly, so best to avoid that right?

I know I'm beating this graph to death, this is M2 money supply but look at that angle man.  The news will blame everything for inflation except the one thing that's creating inflation, the central bank.  The news is like what's the Fed gonna do, oh man please save us from inflation Fed, you guys don't wear capes but you're the real heroes.  Channels such as CNBC worship the Fed as if it was a God like deity instead of a collection of criminals, or better worded "den of thieves".

Think of it this way.  Money is borrowed to stimulate growth.  A business borrows $100,000 dollars for materials and labor and what not.  The business is well managed and makes $300,000 in profit yearly for the next 5 years.  They pay the loan off, the bank makes the interest, and the business no longer needs loans to succeed.  This is how credit is supposed to work to stimulate financial growth.

Then you have the government.  They borrow money with absolutely no regard for efficiency.  The leaders of our so called leadership are worried more about getting re elected than anything else.  And so pockets get stuffed, favors get done, the resulting economic growth is trivial and the debt is never repaid.  This is how you get a mountain of debt that does nothing for economic growth.  And that mountain accrues interest and constantly needs refinancing.

Example.  The latest official inflation data came in at 7.5%.  4th quarter US GDP growth came in at 6.9%.  Do you see how 6.9% growth is actually a contraction?  Do you think thats a good use of funds?  I think it's shitty, and seems that the rest of the public is catching on.  Today the consumer confidence index came in at the lowest level since mid 2011 as the American public is taking a sobering look at their personal finances and prospects.

And when the public takes the time to reflect on their financial situation and prospects its usually not because they're going through times of abundance.  It's probably because they're getting squeezed by the cost of groceries, by the utility bills, the cost of gas, the rising cost of insurance, rising property taxes and the increase in cost of just about everything else.  Another way to look at the sentiment is by looking at the yield curve.  I mentioned this a bit last week but it tightened a lot so it's worth mentioning.

The blue line crossing the black line is a pretty spot on indicator of a financial shit show to follow.  The 20 year and 30 year yields are already inverted, a couple other pairs are super close.

How do we deal with financial shit shows guys?  Do we own it?  Do we make changes to help people and especially future generations?  Do we admit mistakes?

Absolutely not, we print more money.  So get yourselves ready for 

1.  the new crisis aka the reason to print a shit load of money coming late 2022 early 2023

2.  the propaganda pointing fingers at exactly the reason for all the recent inflation, DEFINITELY NOT THE CENTRAL BANK (ie supply chains, gas prices, Russian aggression, your mom's appetite, etc.)

3.  A further widening of the wealth gap which is already at historic levels 

4.  Further political division which will have people arguing amongst themselves over trivial bullshit

5.  Gradual devaluation of today's debt with tomorrow's debt

6.  And eventually, maybe not this cycle but probably in our lifetimes, the end of the dollar as a global reserve currency.

7.  And I'm just going to wager steadily increasing asset prices including real estate.

Bottom line is do your best to own a little piece of this world.  It doesn't have to be your dream piece or your forever piece.  Certainly try and not have a status piece.  But a piece of the world that allows you to hedge your options  tomorrow with your decisions today.  Cause I don't think this thing is going to get any easier before getting a lot harder for the average person, that's all.  



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