Jan

24

While reading this article "Buying Home Is Cheaper Than Renting in 72% of Big U.S. Cities", I started thinking that one of the major errors of most debt deflation theories of our current predicament is their repeated failure to take account of the fact that by and large rents have not changed in the United States. Namely, it is our expectations of the future (and all the economic activity commensurate with such expectations) that have undergone radical transformation, not the set of possible uses of resources in the present.

This is equivalent to saying a society for which the PE ratio of its equity assets declines is not in and of itself getting poorer.


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