The financial press did its job. It scared Americans so badly about a possible recession that now we might just have one.
One of Realty Times' contributors, author David Reed, says he saw a headline that said, "Inflation highest in 17 years." Consumer prices are at 4.1 percent. The Federal Reserve is comfortable when inflation is between one and three percent.
Right now core inflation (excluding energy and food prices) is at 2.2 percent. That's a far cry from the 12 percent inflation the nation suffered through in the 1970s.
He says he wishes people would use their heads and not believe everything the fear-mongering press has to say. We're no where near modern history's worst case of inflation and recession.
And he's right. Fear is what makes people stop spending, and that's when they return to fundamentals.
They buy what they need, not just what they can finance.
And what we need most is food, energy and shelter.
Everything else is on clearance. That's what economists call a recession.
The bottom line is we spend too much money on junk. And we think we need bigger houses to store all the stuff we have.
What we really have is an upside-down economy. Consumers are in charge of 72 percent of the economy. We can't all be consumers -- we have to produce something. What we should have is more manufacturing and jobs right here in the good old US of A.
The real villain of the flagging economy isn't housing -- it's consumers trying to support more products than they can afford. Banks accelerated the problem by lending money to poor risks. Those poor risks did exactly what was in their nature -- they spent beyond their means.
And that's got the rest of the nation in a panic, except for the smart consumers. They'll take advantage of other people's panic. They'll buy better properties cheaper.
If you're an investor, you want to keep those scary headlines coming. If you're a seller, you want them to go away.
