Bubblenomics And The Future Of Real Estate

Behold the Monet

? Economics is like a Monet painting. Stand too close and all you see is a bunch of seemingly random paint strokes. Back up a few steps and an image emerges.

The painting of bubblenomics started with the Plaza Accord, September 1985, where five nations agreed to manipulate the dominant currencies at the time. Japan enjoyed a 50% devaluation of the US$ vs the yen, artificially enriching its citizens so they could travel the world in busloads with eighty pounds of cameras around their necks.

The consequences of that bubble have yet to be corrected. Twentyfour years of fiscal and monetary accommodation led Japan to sport the world's largest public debt-to-GDP ratio.

? The next big one was the US dotcom bubble, which was generating great wealth during the 1990s. More importantly, it started the era during which income and savings became “old school”. Everyone could live off and retire on never ending asset appreciation. When that bubble burst, in came Greenspan with the mother of all bubbles – the sub-prime bubble.

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