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On the housing market yeah it seems to be on a distinct upswing.
Yet there are other parts of the economy that clearly on not.
What are we -- do we should we only running and now finding a mortgage if we possibly can with what what -- -- 95% nanny -- -- -- to whatever it is I'm buying -- well -- yeah I think the thing -- interest -- about the housing market right now -- to step -- -- ask yourself would know what's really going on here until unemployment is still.
Workforce participation is a near all time low.
And yet the housing market is apparently taking off.
The Turkey was on.
Yes so I expect -- hit it very hard yup I don't understand any anxiety -- -- another I think if I don't I don't understand well.
Listen this -- -- but there -- some really interesting things going on there are driving that phenomenon.
And they tied to this other point that you raised before the break which is is the Fed printing money and and these these two things that you know people complain about the Fed printing money but -- like -- housing prices going up but you really shouldn't you should be inconsistent there.
If you like -- housing prices going up.
You should be happy with the Fred printing money because that's and one of the main reasons that housing prices are going well how so I don't understand the connection yeah -- well because look -- fed is doing everything else explain to mechanics if you -- in just a -- maybe they're they're doing extraordinary amazing things to keep interest rates.
Rock bottom low.
Now that has several consequences one of course is mortgages are cheap that's right that's good.
But another -- to people -- pay attention to is it also means investors don't have any were normal to put their money they're not putting their money in the things that they would typically put their money into like bonds and other sorts of things because there's no yield to be made from -- -- not pain any interest because -- printers so locally so.
-- the Fed and this is all very intentional.
They need to get the economy back on track they have concluded that they have to -- -- the housing market.
They have to get the home prices up as we've discussed before.
They want the values of the homes to be greater than the mortgages on the homes right and one of the ways that they do that -- some inflation inflation is good from the Fed's point of view.
So they're when they're really trying very -- to do that but how healthy this housing market really years and who's doing the buying.
Is something that people need to take a breath and understand because.
Home ownership among people is actually adult -- an almost an all time low toll it's 65%.
It's not -- though.
New families are coming in and buying up all of these homes that's not where the -- come from rentals are going through the -- Because the people -- have jobs and yet the prices are going up so what's happening there.
In the answer is an awful lot of the buying is by financial speculators.
Not -- so we'll just let me know we're headed towards and another inevitable housing bubble well it did it means that we need to be very worried I think about this.
Yes that this is an asset bubble being driven by the Fed's super.
Super easy money policies and it's it's an intelligent thing for the Fed to be doing it may not be the right thing it's one of the few options they have -- -- gridlocked Washington.
We can't get anything through congress we can't do any thing.
Their job their mandate is to promote full employment.
And as one of the two mandates of the Fed they've got to do something what are you gonna do it that's your mandate and congress won't participate.
The only thing you can really do was to kinds of extreme measures that they've been undertaking.
To try to keep interest rates super low inject more money into the market because the more money should typically induce -- taking.
New enterprise creation all those things but it's not happening instead the money it's just going into assets.
Part of it into housing part of it into the stock market so the feds can -- this money but they can't force.
-- control without money goat was that is the problem we historically when they've made money easier for banks to borrow banks have taken the money you know -- taken from the Fed -- 2% England blended after Jonathan Hunt at 4%.
And they're very happy.
But that's not what the banks are doing anymore that it did so the Fed just keeps it's really is to cool and classic pushing on a string.
And that that is pushing on a string here pushing on a string and they're just failing to ignite the real economy.
What they're hoping.
Is that -- psychology.
This is literally what they're hoping then that the psychology of an apparently rising stock market and -- apparently rising housing market.
Will make people feel wealthier and they will start to do more things got to some extent you can see that that's true because consumer spending.
Is still doing fairly well and that's one of the few engines it's actually working in the economy right now couple of --
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