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Investing with Falling US Greenback: Great Correction and US Real Estate Market Today

By Marco Santarelli

The Fed was meant to protect the value of the U.S. Dollar, at least that is how it was initially sold to the public. We still do not know why the buck needed "protection". It was solid for the longest amount of time, excepting the time when President Lincoln printed too many of them to pay for the War between the States, but those greenbacks came and went.

When the Fed was set up in 1913, the dollar was worth as much on that day as it was when Napoleon Bonaparte set off for Russia.

Instead what the Fed has successfully done is allow the buck to slide and decline through the 20th century and is now worth only about 3 cents! The chance of a continuing decline is powerful.

The Great Correction

So long as the Great Correction continues, coupled with historically low rates, it's going to be a fab time to speculate in real-estate.

Thanks to the making of the Fed Reserve virtually 100 years ago, Ben Bernanke has a little "technology" called a printing press. And he knows how to use it!

The Great Correction began about 5 years ago and the Federals have been fighting it ever since with trillions of greenbacks of financial and monetary stimulus.

Naturally, the markets and the economy reacted certainly and GDP growth recommenced in 2009. Nevertheless there's no ?recovery? The private area is correcting and the GDP expansion rates have been going down for 40 years.

The feds may continue to fight these disheartening expansion rates, and they will fight the Great Correction together with it.

The federal government borrows over a trillion dollars a year with no end visible. Last year, 61% of that cash came from? Ben Bernanke's printing press!

The issue is that most of the growth relies upon further spending and money-creation by the Feds. This continued cash creation will further erode the U.S. Greenback through inflation, permitting you to repay your fixed rate mortgage with cheaper and less expensive greenbacks, and eventually making your mortgage worthless.

US Real Estate Today

US property may be the best investment of all time today. Adjusted for inflation, housing prices are back to 1979 levels, and mortgage rates are about 1/3 what they were back then at 15% to 20%. Over the period of a $200,000 mortgage you would pay as much as $700,000 including interest.

Additionally, the classic house sold in 1979 was about 1,600 square feet while the average house today is about 2,200 square feet. That's a difference of $75 per square foot now vs $100 in 1979. That's a much bigger home.

There are great real estate deals to be had in markets all around the U.S. For instance, you can buy 3-bedroom single-family homes between $50,000 to $80,000 in markets like Indianapolis, Atlanta and Kansas City, among others, with rents between $700 and $900 every month. And all these properties generate double-digit capitalization (cap) rates.

US housing is a superior deal now than it has ever been vis affordability and value per greenback. To get back to normal price levels, the price would need to elevate by $100,000.

If you could borrow mortgage loans at the lowest rates in history, and ahead of what could actually be the largest inflationary time in U.S. History, wouldn't you borrow as much as you possibly could?

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