The Farming Bubble

For some time I have been arguing that real estate prices are rising not because of a recovery in the market but because of inflationary pressures by the Federal Reserve to artificially boost them – a bubble. The Administration cannot afford to have a depressed real estate market because it was the real estate market that tanked the economy in the first place and a failure of that market to recover would illustrate quite plainly the failure of the Obama Administration policies. More than that, the RE crisis has allowed government to make real, fundamental changes in the way America operates, has allowed the federal government to intrude in what has traditionally been a local industry.

So, thanks to the injudicious use of the printing press and artificially low interest rates the price of housing is on the rise. That was to be expected; real estate is not portable and there is no more of it being made, so when the value of a dollar declines the price of a property rises. If interest rates were free to rise we would see less price increase but the Fed will not allow that either.

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