Financial Advice
- Thread starter BayView
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Noddy,
The same way it's been working for ever! Why do you think it will be any different today or in the future??
Hi Nobby,
True, we can't go back in time unfortunately... but, presumably people's incomes will rise with inflation too, right?
Nommy,
When this happens (and it will, it's part of the normal economic cycle), the federal government will utilise macroeconomic policies, that is, utilising and adjusting monetary and fiscal policies to manipulate the ecomony into moving towards the desired direction.
Boods
Hi Jit,
Not necessarily.
Incomes will rise as long as businesses are making profits and as long as there is a demand for people in the workforce.
When there is an economic boom alot of money is spent by businesses on mergers & aquisitions, business expansion, additional supply of goods & services.
What happens when there is a recession?
When unemployment increases, people lose their jobs, full timers go to part time and you have more people fighting for the same jobs. What will this do to real wages?
No one can tell me that this hasn't happened in Australia in the last 12 months.
THe bigger picture is this. When the market corrects itself during a recession the malinvestment are liquidated. In a free market without interference from the government you will see the bad investments liquidated and stronger businesses takeover them.
We have seen this in Australia with some of the recent bank takeovers, i.e westpacs takeover of Rams, CBA > Bank west. The profit making part of the businesses will be taken over whilst the crap is left to rot.
The thing to understand and watch for is this.
You need to watch how the federal government reacts and what the RBA does in relation to controlling monetary policy.
They will either choose to allow the recession to take place or they will choose to prolong the inevitable. We know what our current governments stance is.
Just don't get caught with your blinkers on. Keep up to date with what is happening here and overseas.
Current events form future trends.
Be thankful that Australia still has some productive capacity i.e resources, agriculture, commodities. There will however come a time when we may not be needed as much.
Hi Boods,
I agree partly on what you say. But not all governments will choose to do this. Go back to when Keating was Prime Minister and the recession we had to have.
Having said this, the main aim of government is to get re-elected. They will not get re-elected by increasing taxes, they will get re-elected by printing more money in the form of bail outs and infrastucture planning when required.
Who pays for this at the end? working class Australians.
Or in Americas case, the next 3+ generations.
Will it always work? well it didn't for zimbabwe and iceland.
Now we can't compare the two above with Australia, but just giving you true examples when government was unable to manipulate just by throwing more cash around.
I have heard World of warcraft is pretty damn addictive. So definately staying away from it. If you are going to watch stuff on youtube, watch something more interesting.
Heres a good one
http://www.youtube.com/watch?v=u-54Y-A9iBo&feature=channel_page
Heres another one more in relation to Australia
http://www.youtube.com/watch?v=QgWsnVDlWcU&feature=channel_page
Hi Nommy,
Thanks for your thoughts and opinions. I would offer, however, that the property investors who are successful in the longer term are not 'flippers' Flipping is, however, a strategy that does work during a rising market. Most people here I think would agree that the property market is cyclic, although the length and magnitude of each cycle cannot always be predicted.
Inflation is definitely the friend of the careful investor, who buys appreciating assets and lets inflation reduce the debt over time. For example, I plan never to sell my investment properties, and am looking to acquire another 4 or so properties over the next 5-7 years, as part of a wider investment strategy.
Also, many here (including me) use a range of risk management strategies to protect ourselves from a range of events. Realistically, well chosen properties with increasing rent over time will, in the longer term, be able to pay for themselves, eventually down to the point of outright ownership. On the way, though, owing such assets offer a range of other investment opportunities.
Finally, I would also suggest not assuming that because someone wants to do something you deem risky, that this represents the whole of their investment strategy. Having risky components of a portfolio is fine, dependent on your overall approach, risk tolerance and risk management strategies.
Thanks for your thoughts!
Thanks for your thoughts and opinions. I would offer, however, that the property investors who are successful in the longer term are not 'flippers' Flipping is, however, a strategy that does work during a rising market. Most people here I think would agree that the property market is cyclic, although the length and magnitude of each cycle cannot always be predicted.
Inflation is definitely the friend of the careful investor, who buys appreciating assets and lets inflation reduce the debt over time. For example, I plan never to sell my investment properties, and am looking to acquire another 4 or so properties over the next 5-7 years, as part of a wider investment strategy.
Also, many here (including me) use a range of risk management strategies to protect ourselves from a range of events. Realistically, well chosen properties with increasing rent over time will, in the longer term, be able to pay for themselves, eventually down to the point of outright ownership. On the way, though, owing such assets offer a range of other investment opportunities.
Finally, I would also suggest not assuming that because someone wants to do something you deem risky, that this represents the whole of their investment strategy. Having risky components of a portfolio is fine, dependent on your overall approach, risk tolerance and risk management strategies.
Thanks for your thoughts!
I have read many books in relation to using inflation to pay back money you borrow now with overinflated dollars of tomorrow. Wouldn't it be fantastic if we could borrow 20 year fixed rate loans like other countries.
Anyhow thats my 2cents for now. No point continuing this thread, the arguments can go on forever.
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But the arguments are when I learn stuff, usually when somehere gently explains why I'm wrong...
Keep it coming, I say. As long as we are arguing the issue and not getting personal, most of us are widening our minds.
A good way to learn is to educate yourself. I can provide you with many places to go online. Just pm me what you are interested in finding out.
