Asset Deflation and Monetary Inflation Revisited

Asset Deflation and Monetary Inflation Revisited

Currently, we're experiencing both asset deflation and monetary inflation. Assets are going down in value, making it a fantastic time to buy them. Jason Hartman recommends buying in the dips and using the temporary strength of the dollar to invest in things with universal demand, all while locking in reliable, fixed-rate mortgages. Here's more about asset deflation and monetary inflation, and how both can affect your investment.

Land Value

To truly understand asset deflation and monetary inflation, it's important to separate assets from monetary instruments and analyze them both. Land is an asset,

and it's going to devalue in several places. Jason Hartman doesn't trust land as a strictly speculative investment that banks only on appreciation, believing it to be a risky investment.

Jason likes to quote an old saying which states “they're not making anymore land.” It's true, every piece of land on the planet has been discovered, cataloged, mapped, and documented. There's always the possibility of creating new stock, new money, and finding more gold, but we can never create more land. For this reason, land benefits from scarcity.

Packaged Commodities

Packaged commodities, improvements, glass, steel, lumber, labor, energy, petroleum products, and similar elements of income property have all gone up in value, primarily thanks

to …

Rent and the Population

Within the next 30 or so years, it's said the population in the U.S. will increase by another 100 million people. About 40 years from now, the population will have increased to about 3.5 billion people. These “additional” people will cause the consumption of packaged commodities to skyrocket even faster, greatly benefiting income property investors.

Rent is also on the rise as we add approximately 1 percent yearly to the population; roughly 3 million people who all need a place to live. The population distribution is uneven because of the largest demographic group of people in history, Generation Y. Exceeding the famed post World War II Baby Boomers by about 4 million people, Generation Y is moving into the prime years for renting. This creates a large upward pressure on rent, which is fantastic for income property investors. Consider, however, the importance of buying when everyone else is afraid to. It's best not to wait until headlines are talking about nothing but how the housing market is booming.

With an increasing population, shortage of housing, and lack of new construction, rent is in high demand. Take advantage of the opportunity to purchase a cash flow machine like income property while you still have the chance. (Top Image: Flickr | Cdsessums)

The Young Wealth Team