11.07.11 (Part 2) Real Estate Radio With Louis Cammarosano

Ryan discusses the upcoming employment report and predicts that mortgage interest rates should remain steady. Ryan notes that a flight to safety has kept mortgage rates low. Louis notes that the Fed did note that they are thinking of buying more mortgage backed securities, like they did during QE1. Louis notes that Fed buying the 10 year notes under Operation Twist may not have an impact on consumer interest rates, and indeed that interest rates rose after them implementation of Operation Twist. Louis notes, however, that if the Fed bought mortgage backed securities that could keep mortgage rates low. Louis notes that banks have a disincentive to loan money at the current low rates for thirty years. Louis notes that low interest rates really help the banks rather than the consumers. Louis notes the artificial low interest rates are a back door bailout. If they were really meant to help the consumer and the economy we would be out of the recession. Louis notes that spending money doesn't fix the economy and that spending borrowed money certainly doesn't help. Indeed the economy can be helped by an increase in production, not spending. Louis notes that low interest rates force people to put money into the stock market and that a better play may be to put money into gold and silver or other commodity assets. Ryan notes that the government factors out food and energy when calculating the inflation rate. Louis notes that these two components are the bulk of a household's budget. Louis notes that there are a myriad of reasons that the Fed may need or want to print money. Louis notes that the increase in the money supply is inflation. Louis notes that the people who get the first printed dollars (the banks) receive the full benefit. Louis notes that if inflation increases, rents will go higher. In that circumstance, having a low fixed interest rate will be a good hedge against inflation. Louis notes that when there is inflation, wages will rise, perhaps not as much as inflation, but certainly more than your fixed interest rate, which will make make it easier to pay your fixed rate mortgage.

Category:

News & Politics

Tags:

• operation twist
• federal reserve
• inflation
• flight to safety
• QE1
• mortgage backed securites
• gold
• silver
• bailouts
• back door bailout
• austrian
• economics