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by the88doctor 1014 days ago
3% construction loans would majorly undermine the Fed's effort to fight inflation
3 comments

Excluding shelter, inflation is already bellow 2%.

Not building enough housing is majorly undermining the Fed's effort to fight inflation.

Not sure what data you're looking at, but that's completely off. Trailing 12 month food inflation is over 4%. Transportation inflation is over 10%. Services excluding energy are up 5.9%.
Sure those are other numbers, but the number I’m looking at is inflation ex-shelter for the most recent month? [0].

To be clear, housing is categorized as a service and transportation inflation is 1.6% [1]

Not sure why you think I’m completely off but I would be curious to see links.

[0]https://fred.stlouisfed.org/graph/?g=18UVC

[1] https://fred.stlouisfed.org/graph/?g=18UVL

How?

It's not 3% for everyone, it's 3% for specific projects for low income housing.

The boom gets started with an expansion of credit. The fed sets rates low, are you starting to get it? That new money is confused for real loanable funds, but it’s just inflation that’s driving the ones who invest in new projects, like housing construction. The boom plants the seeds for its future destruction. The savings aren’t real, consumption’s up too! And the grasping for resources reveals there’s too few. https://youtu.be/d0nERTFo-Sk?si=mcHcwlGi-TPaf5q-

The claim being that to back a loan with new “printed” money is necessarily inflationary.

Loans backed with saved/invested funds are non-inflationary, because the saver gives up their ability to consume with those funds, in proportion with the consumption the borrower takes on.

Nope. It would be a massive pressure-relief valve on inflation, so much of which is in housing expenses, not just post-COVID, but for decades.