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Bluegill
1000+ Penny Miser Member
USA
1964 Posts |
 Posted - 06/29/2009 : 09:14:29
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quote:
Originally posted by fb101
I am amazed that all the people arguing against inflation seem to have a case of tunnel vision.
They look at it as if only growth can cause inflation. Were they alive during the late 1970s and if so perhaps comatose?
Don't tax increases on businesses have an inflationary impact? Is there any difference to consumer prices whether gas soars to $4.00 because of supply or because of excessive taxation? Can the dollar's value not drop?
Where do they find these congenital idiots?
Well Said.
On a related note, we can have inflation and deflation at the same time. Specifically, property can continue to depreciate in an atmosphere of inflation.
When prices of food and utilities go up because of excessive taxation, that leaves less money left over for housing in the family budget. That means the housing prices have to come down to match the left over median wage.
I'm seeing it already in my area. MI taxes the value of a home by multiplying the municipalities millage rate with the assessed value, which is half the appraised value or fair market value.
When homes were absurdly overpriced, the cities and towns were adjusting the assessed value up with each increase in price. They did this by reassessing the property with each transfer of ownership. Homes were being sold on average of every 18 months as everyone thought they were going to get rich quick with real estate.
MI's boom lasted from '98-'04. The Detroit Metro area property values lost 11% in '05, 9% in '06, 13% in '07 and almost 15% in '08. We are at mid '90s price levels with no end in sight.
Now that the real market values have adjusted down. The municipalities are not reducing the assessed values. Some properties are literally being double assessed.
The buyer has X amount of dollars for the housing budget. Simple math, the more that comes out of X to pay for taxes, the less that can be applied for the mortgage...
The more that comes out of X for utilities, the less that can be applied for the mortgage...
The more that comes out of X for food and other essentials, the less that can be applied to the mortgage...
When the velocity of the money starts accelerating from all the stimulus spending, on top of the tax increases, how can we not have high inflation? The price of commodities and consumer goods is going to go through the roof.
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USA Today article warns of looming inflation
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