According to Sir Mervyn King, Governor of the Bank of England, assets are underpriced already.
This is interesting. The house next door is up for sale for £389,000. It has been let for about £1200 a month, around £12,000 a year net. That makes the yield just over 3%. You can get 6% by putting your money in a building society. Northern Rock pays 6.15%. So the house next door is not underpriced.
So where are these underpriced assets?
I got involved in a discussion with a Youtuber called “Philosophy all along”. This was in connection with criticism of Trump’s policy of deporting illegal migrants, which he argued would be bad for the economy as it would reduce demand. This implies that there is a need to import people to sustain demand. There is no obvious reason why a population should not be able to consume everything that the same population produces. If it can not, then something else is going on. It is a basic principle that wages are the least that workers will accept to do a job. Wages are a share of the value added by workers through their wages. The remainder is distributed as economic rent, after government has taken its cut in taxes. Monopoly profit is a temporary surplus that after a delay gets absorbed into economic rent. Land values in Silicon Valley are an example of this; it's like a gold rush. The miners get little out of it. Rent and tax syphon purchasing power away from those who produce the g...
Kommentarer