Nostr Web Client

The money supply has increased pretty reliably at about 7% per annum for like 50 years. Mostly mild fluctuations with a few exceptions. I would pose the question as to why you can get a 4-5% mortgage right now?

I think the answer is that we have to have a clear way to measure against the past. It’s only in the comparison to a harder asset that has enough liquidity that we can even see the degradation of the currency and accurately price it. (CPI is total garbage for this)

This is why I think the presence of bitcoin is the only thing that will actually restore real interest rates.

Laan Tungir 6mo ago 💬 1

Okay, I think the argument that for a long time now, mortgage rates have been less than that of monetary debasement (what we call inflation on nostr) is the best argument for the case that steady inflation favors borrowers.

I guess the counter to that would be that the mortgage market is heavily subsidized (Freddie, Fannie, etc), and it is the subsidy that is causing the advantage for borrowers, not the constant inflation.

Reply to this note

Please Login to reply.

Discussion

Guy Swann 6mo ago

The other direct subsidies definitely add to it, but i think the bigger systemic subsidy is inflation. Which, you are theoretically right, SHOULD even out with the interest rate. But the problem is you need enough liquidity on something that is unaffected by the false interest rates, in order to “release the pressure” so to speak. Theres just nothing large enough to actually be the value check on mispricing tens of trillions of dollars in loans every year.