Australian housing bubble cont'd.

Some additional thoughts on the Australian housing bubble which were not presented in my previous post. Again, I simplify things as i'm reaching out to the everyday Australian, rather than economists and academics.

Please note: When i refered to stocks as being a "productive asset," what i intended to say is that you're investing in a productive/real wealth generating sector of an economy.

For more information visit:

www.mises.org
www.lewrockwell.com

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[BTinHD]

You make some very good points. The problem is your'e using an ideology (free market fundamentalism) to guide your data collection and interpretation. Google: Steve Keen. The private banks create the money supply (yes, its gone into housing). Deposits do not create loans. But Loans creates deposits. This sets of the unsustainable ratio of debt to GDP. Private debt actually rose faster as interest rates began to rise.

[AussieAustrianBlog]

@BTinHD I don't understand your criticism of free markets. Can you please expand? I am familiar with Steve Keen and do not agree with much of his work. However, on the housing crisis he talks about the symptoms of credit expansion on the housing market, as oppose to the fundamental problem of what led to the unsustainable boom - namely credit expansion. This is the basic reason for all previous asset bubbles in history.

[PassiveStealth]

Great info and insight from your researched point of view. Lets say you are correct and the property bubble bursts, house prices halve. This in turn will make housing more affordable to the mass. As you may well know that in Australia we have a severe undersupply of houses and new dwellings (govt red tape), now everyone can buy a house, not enough houses = bid wars, highest bidder wins = house prices go up again (income unaffected by burst bubble). Just a thought

[AussieAustrianBlog]

@PassiveStealth In all markets prices go up and down all the time. In regards to your first point, undersupply is not the problem, rather it is artifical demand created by credit expansion. That is, demand curve shifting to the right (economics speak). All asset bubbles are manifested due to increases in the money supply/credit - it is counter free market. I don't see prices falling 50% anytime soon if at all. Rather i see a steady decline downwards, perhaps with some more severe drops.

[BiggerThinking1]

Do you focus much on international economics - how do you see Japan going forward - after 20 years of deflation - will a global hyperinflationary bubble halt japans deflationary spiral? Doesnt the world need a stable japan yen in the ForEx markets.

[AussieAustrianBlog]

@BiggerThinking1 Sorry for the late reply...away on holidays. I follow international economics quite a bit, but currency markets are not a strength of mine. I don't have alot of current info on Japan, but i don't believe they're out their slump. They still have VERY low interest rates and were implementing fiscal stimulus last year which is NEVER good economic policy. They need more deflation and price deflation and allow the economy to restructure. Things won't improve until they quit printing

[mysupermaltese]

Chris, love your honesty , you are spot on! Keep up your good works, thank you for posting this video!

[theSharperEnd]

Congrats. Finally, a person who's read between the lines and realises that costs are being deliberately and artificially manipulated.

[WinstonSmithsBrain]

Nice video man, and I'm with u. I 'subscribe' to the G. Edward Griffin - Creature from Jekyll Island view of inflation as a hidden tax caused by an increase of the money supply from creation of fiat money out of debt by banks and central banks lending to governments.

[cityslickeroz]

Very nice informative video pls keep them up. We are at a very interesting point in the

correction cycle with stock levels rising at a fast pace.

[fenderboy88]

Both political parties are the same,both Liberal and Labor support Keynesian economics but not quite pure Keynesianism which is wrong.

During the GFC the Liberals supported the first round of stimulus worth 10 billion but opposed the 40 billion dollar one i guess on populist grounds.

Government always grows because of special interests and that its politically popular for a political party to say that they will ''ease housing affordibility''