What is inflation? With the pandemic shutting down the world economy, the government determined that the US needed stimulus money, or quantitative easing, to maintain the broadest spectrum of health in the economy. Hometown America has been affected the most, and when products are scarce, they cost more. That’s why we have inflation. The Fed flooded the economy with cheap money, offering different stimulus packages to help keep the country afloat. Wages have risen to entice more people into the job market, especially in low-wage service sectors, which is a good thing but also contributes to inflation. The cheap money has been good for Main Street as well as Wall Street and has left the US much better off than other countries around the world.
Inflation will likely continue for the time being, but the economy will eventually return to a more normal pattern within the next 18 months or so as tapering occurs. In the mortgage market, there’s really no supply and demand right now, with the rates artificially held down by the government. When the government stops buying treasuries, mortgage-backed securities, and bonds, supply and demand will normalize and affect rates more. The 10-year treasury usually indicates where the money is heading, and as it rises, so will rates.
This week, Jeff is "on location” in Las Vegas, where businesses are growing and the entrepreneurial spirit is alive and well, despite inflation. His guests include:
- Cryptocurrency expert Oscar Carboni (LiveWithOscar.com) explains how blockchain works.
- Joann Munz (ReelEstateBarbie - Instagram) from Brady Realty Group talks about the property management profession.
- Nevada's Charles Giscombe of Malibu Funding takes a look at the non-QM business.