Sunday, February 01, 2009

Houses and Money

Modern people live with an assumption that house prices will always rise. This is a false view. The intrinsic value of a house declines over time as it deteriorates and become old fashioned. What actually happens is the money loses its value over time, as central banks and governments manipulate their country’s currency. People confuse a decline in the value of money with an increase in the value of their houses. That latter is an illusion (unless captured by leverage).

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