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Inflation?

Discussion in 'The Economy' started by Chomp, 10th Oct, 2008.

  1. Chomp

    Chomp Well-Known Member

    Joined:
    12th Jul, 2007
    Posts:
    61
    Location:
    wa
    I am confused! I have just been reading through the posts and have found some contradicting information regarding the cause of inflation (lowering interest rates).

    The reason why I am posting this thread is because I want to know if;

    1. The rates will drop allowing people to buy property which will force up prices.

    2. Inflation will increase which will mean a rise in rates to kerb it.

    3. Potentially causing a fall in property prices which is when I would like to buy:)

    I know no one has a crystal ball and anything is possible but.... does anyone else think this may happen?
     
  2. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    chomp

    1 = yes because of the slowing down of economies worldwide
    2= short term will be up but is expected to come down so Interest rates will be down as well
    3= with interest rates coming down I don't see it hapenning.

    Are you thinking to buy in Perth?

    Cheers
     
  3. Chomp

    Chomp Well-Known Member

    Joined:
    12th Jul, 2007
    Posts:
    61
    Location:
    wa
    Hi BV,

    Thanks for your response, I am looking at NSW sea change areas like Nelson Bay, Port Maquarie, The Entrance. Places dont seem to be selling there yet so I think prices may drop a little.

    The yields there are also bit low at the moment, I think that timing getting in will help alot so Im holding off.

    I am also going to the Navra Fund launch as well in Perth so that my sway me to go into shares depending on what Steve has to say, I think maybe the Australian market may bounce back strongly next year which would give me more money to invest in property once the yeilds improve.

    But I am still learning and thanks to sites like this and SS I kept my money safe by not investing over the past year which I could easliy have lost nearly half of it! Patience has been hard though!

    What about yourself BV do you think the stock market may rebound?
     
  4. Billv

    Billv Getting there

    Joined:
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    1,796
    Location:
    Sydney, NSW
    I believe it will. (it has done every other time...:D )
    IMO there is money to be made we just need to pickup the right stocks and to be patient.

    I am still going to pickup a Property or 2 but I aim for properties with good yields. I don't mind waiting fpor capital gains, but I don't like the idea of contributing much towards my IP's.

    cheers
     
  5. crocodile

    crocodile New Member

    Joined:
    13th Oct, 2008
    Posts:
    1
    Location:
    Sydney
    Hi Chomp, unfortunately not quite so simple. Inflation is nothing more than a decrease in the value of money. Usually caused by oversupply. Interest rates are only a target and in this country at least used by the RBA to control the supply of money. For a brief description of how the RBA conducts it operations try visiting <http://en.wikipedia.org/wiki/Open_market_operations>
    Most things in this world are governed by supply and demand including money itself.

    Have a great day.