Economics Professor Richard Judd said on my radio program this week to be prepared for Bernanke to implement QE III this year. Printing money will devalue a dollar already down 30% since 2001. Printing money when there’s no demand for it ultimately leads to inflation and higher interest rates.
Barack Obama said in his speech at Osawatomie that: “Limited government and free market economies don’t work, and never have.” That is straight from Hugo Chavez’s playbook. Obama said he wants to ensure economic fairness. Barack Obama believes he can dictate equal outcomes for a nation with over three hundred twenty million citizens. How? Government intervention into the private sector through central planning and wealth redistribution.
Perhaps Obama missed the ongoing European crisis resulting from these same policies? No he sees it, but this is Obama’s promised Fundamental Transformation of America. Abandon the Constitutional framework of limited government, and a free market economy for Utopian equal outcomes. This is not American. A limited government protecting equal opportunity for the individual to pursue their own happiness within a free market economy is American, and the proven path to prosperity.
Congress just raised the debt ceiling to $16.4 trillion. The government’s new ceiling is forecast to last until just after the election, when another increase will be needed. Those on the left say we can afford it because we are the richest nation on earth. So was Rome, and Great Britain at one time.
When investors see risk, they’ll demand higher interest rates on loans to a spend happy America. That will be game over. Interest rates will go up. Some economists are predicting double digit inflation rates as early as 2013 to 2015, followed by double digit interest rates.
There is plenty of blame to go around. Presidents and congresses of both parties are guilty of overspending. Affixing blame is not a solution, it is a history lesson. Harry Truman said there’s no such thing as the future, only history that hasn’t happened yet. Look to Europe today to see America’s tomorrow if we stay on this path.
Obama will have added $5 trillion to our debt (+41%) in his first term when he promised during his campaign to cut deficits in half. The left says he didn’t know how bad it was and had to spend the money to keep America from going into a depression. Rubbish. Obama spending is a textbook example proving government spending doesn’t create recovery or jobs.
The unemployment rate reported by the BLS was 8.3% when the Stimulus was passed, and last week on the third anniversary of the Stimulus, the unemployment rate was 8.3%. Gallup reports the unemployment rate at 9% and 19.2% when including the underemployed. The GDP was a pathetic 1.7% in 2011. So much for recovery and jobs. Guess $5 trillion doesn’t buy what it used to.
What does this have to do with renting versus owning a home? The government is misleading you about the state of the economy. The Obama sycophants in the media are accomplices to the crime by reporting the administration’s spin as truth without challenge. This places you in jeopardy.
If you are renting, here is the truth. Interest rates have never been this low. Home prices are low. There’s an abundance of homes for sale. This may be your last chance to guarantee a low cost for your housing going forward.
When inflation hits, not if it hits, rents will go up. If the economy goes into another recession, a good probability due to Obama energy policies, many more families will lose their homes when they lose their jobs. Demand for rentals will go up, rents will go up.
If you don’t believe my analysis is correct and rosy days lay ahead, don’t buy a home at these historically low rates. The best case scenario is you will miss an opportunity to buy a home with the cheapest money ever. The worst case scenario is you’re playing Russian roulette, and lose.
The opinions expressed here are solely those of Fritz Pfister or identified sources, and not necessarily those of RE/MAX Professionals of Springfield or RE/MAX International.