Markets and Money Reader Mail

–Some reader mail?


A lot is being said about the current generation being lumbered with billions of dollars of debt resulting from the Gov. spending spree.

Personally, I do not care at all.

The current and future generations have been bequeathed Trillions of dollars of assets and infrastructure.

The proposed Gov debt is a mere drop in the bucket.

I would be very happy if someone would bequeath me a house even if there was a mortgage attached to it.


–Very generous of you Garry.

–A reader has a different interpretation of what progressive taxation (a mild form of robbery) is.

“This is called caring for your fellow human beings – this is called helping a friend, relative or even a stranger when they need help – God forbid you or your relatives are ever in need – law of the jungle is dead – no more jungles – you cut them all down! I can’t believe anyone still thinks this way. Get a life on another planet please!!”

–The things you describe have nothing to do with taxation. They are what you can (and maybe should) do in your private life. And by the way, we didn’t cut down the jungle. Or start the fire. It was always burning.

Sorry Dan,

You may try to justify hyperinflation all you like but we are not re-entering the 1970’s – I lived through that time and we needed a 30% deposit for a house, the prices for which did not deflate. I cannot see how hyperinflation can eventuate – if anything there will be a shortage of money.

Here’s what I see – more money created to pay for more debt – more debt defaults creating less funds available to banks – creating less money for taxation – creating major government defaults creating more SHORTAGE of money.

If we look at the example of Japan – where’s the hyperinflation there and they have far higher savings – yet that has not created hyperinflation – deflation is still continuing after an 80% fall (deflation) in assets.


–A fair argument. But it’s impossible to have a shortage of money when the government controls the printing press. It can print all it likes. What it can’t do is make people spend it or want to borrow it or even take it seriously.


You said progressive taxation is, “base (sic) on the class-warfare idea that the rich get rich illicitly and conspire to keep the riches of society for themselves.”

The rich get rich due to good fortune. The redistribution is from the fortunate to the less fortunate.

–Some people are born rich. Some people get that way through hard work. Why do you or anyone else get to decide when the fortunate deserve to be knocked down a peg? If you want to help the less fortunate, why not use your own time and money instead of stealing from someone else to do it?

–And finally, a letter on property.

Hi guys,

In reference to your email yesterday and the graph below on AUS v US property market. I am not a subscriber to a large (i.e. greater than 10-20% fall in house prices) fall in property values and would add the following:

– AUD mortgages are recourse, therefore a lot more to lose than US property buyers whose mortgages are non-recourse

– No capital gains tax for AUD owner-occupied properties, and concessional capital gains tax for investment properties in AUD

– Whether rightly or wrongly, our govt policies are skewed towards a solid/buoyant property/building sector. I can’t see this changing for political reasons.

– Culturally, owning your own house/property is a rite of passage for most Australians. This provides a natural level of demand, which is underpinned by our baby boomer parents who are able (through certain financial institutions and products) to provide additional security to otherwise marginal homebuyers. I’m not saying this is the right thing to do, but it is fact.

I understand your completely rational views why property values should crumble, but for the factors outlined above I don’t believe this will eventuate (unless we get soaring inflation/interest rates, but even then, historically, AUD property values have risen in times of rapidly rising interest rates).

Enjoying your musings…

James T.

Dan Denning (and readers)
for Markets and Money

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.

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7 Comments on "Markets and Money Reader Mail"

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I have to say James T makes the point quite eloquently in his letter on property. It all makes sense for a price crumble here but unlike the rest of the world, every class and sector of Australian society is so obsessed with owning property that even a small drop in prices will create an opportunity too great for many to miss out on. It will take a lot to change peoples values and investment belief in bricks and mortar in this country.



You seem to be into broad statements without any basis for your argument so here’s a rebuttal – you’re a twit.

Kind regards

Hmm, I am particularly intrigued by Garry’s argument. I suppose it would be helpful to know how old Garry is. While the “I earned my wealth, I have the right to squander it” argument is valid, I’m not sure it applies in this case. Most people in this country didn’t “earn” the wealth of this country, they inherited from the previous generation, which inherited from the generation before that, etc… Each generation has incrementally added to the nation’s wealth for the past two centuries. So does the current generation have a right to squander it all? Clearly, it should have… Read more »
James T: Now and even more in the future we can look forward to: – high unemployment – much tighter lending standards – higher interest rates – less Gov. intervention in the RE market as they lose money trying to prop it up (though of course that is debatable. Consider how much the Gov. can actually prop this up, and how much it can coerce people into buying at artificially high prices). Given those points above, how do you suppose that people will buy all this property you speak of? Recourse mortgages – will make people buy more houses? No.… Read more »
Mark Duker
Dan Excellent Article on Today’s edition of Daily Reckoning regarding progressive taxation. “Fair Share” What is fair share? If I have a dollar and you have a dollar and we both give .15 cents, that is fair share….This political notion that one guy gives more than the other can somehow be defined as equal “fair share” is nothing more than state propaganda! You asked a rhetorical excellent question, but failed to give the answer. Where is the freedom country at? Please offer your readers the list? Shame for us Americans we are 100% screwed as we live in the only… Read more »
Australian’s are saying it’s “different here” because they’re obviously scared of losing their home, but there’s more to it than that. If you’ve invested the best part of your life’s work into property, intellectually speaking, it’s hard to accept the possibility of a down-turn in real estate values. I don’t even try to bring it up in conversation with friends any more. It’s just a source of tension and unpleasantness. Many of my friends are also thoroughly convinced they are going to be millionaires in the future through their own property. At the same time, they are neck-deep in debt… Read more »

I wholeheatedly agree with everything you just said. It’s exactly the same in my world – an RE crash is a topic to be avoided, and you gain absolutely nothing.

Fortunately there is like minded people online here :)

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