This is the scariest blog entry I've read in a while.
In essence, the gov't is trying to keep interest rates low to keep the economy from tanking. Low interest rates mean lower operating costs for entities with large debts. Most American entities have large debts, so lower interest rates reduce operating costs, which means it is easier to keep a business or household running.
They recently failed and interest rates jumped 30% in one day.
Simultaneously, the value of the dollar is tanking. Down to its lowest value so far this year.
And the stock market is excited about a small bump in a Chinese manufacturing index.
What I think right now:
1) This sentimental stock market rally is running on fumes. I trusted it for 2 days, took my 6% return and ran.
2) If the Fed doesn't get things under control, interest rates are going to continue to rise, which is about the worst possible news for house prices.
3) For the Fed to get interest rates under control, it may need to throw the dollar under the bus, which would obviously lead to 1970s style double digit interest rates and a thoroughly toasted economy.
I expect the gov't to take the proactive approach and accept ridiculous inflation as a pain that voters don't understand well enough to care about. Because of this, buying a house now as a hedge against inflation and as a way to lock in still historically low interest rates is a good decision. Considering that it can still be done with basically zero money down, it is a bet that can't go too badly. Not for me, anyway.