Fritz Pfister

Distinguished Professor Emeritus Richard Judd of UIS said on my radio program this week to be prepared for Bernanke to implement QE III this year. This risks another credit downgrade. Printing money will devalue the dollar already down 30% since 2002. When investors see greater risk in financing America’s suicidal borrowing for insane spending, they will demand higher interest rates. That means your interest rates will go up.

Barack Obama said in his speech at Osawatomie that: “Limited government and free market economies don’t work, and never have.” That is straight from Hugo Chavez’s playbook. Obama said he wants to ensure economic fairness, meaning Barack Obama believes he can impart equal outcomes for a nation with over three hundred million citizens and twenty million illegal citizens. How? Wealth redistribution.

Perhaps Obama is missing the ongoing European collapse in nations who followed these policies? No, this is Obama’s promised Fundamental Transformation of America. Desert the Constitutional framework of limited government, and a free market economy to promise Utopian equal outcomes. This is not American. A limited government protecting the equal opportunity for the individual to pursue their own happiness in a free market economy is American, and the only path to prosperity.

With a whimper, founded in an abrogation of responsibility, congress with the unconstitutional super committee debt limit deal just raised the debt ceiling to $16.4 trillion, a $1.2 trillion increase. The increased amount for the government’s blank check is forecast to last until just after the election, when another increase will be requested.

This means we owe more than the sum total annual output of all goods and services produced by America. Greece reached 110% of their GDP when they collapsed. Why will America be any different? Those on the left say we can afford it because we are the richest nation on earth. So was Rome, and Great Britain at one time.

The interest payment on our debt at near zero interest rates, is nearly a half trillion dollars a year, at the $15 trillion level. Interest payments are going up. If interest rates increase to a modest 7%, our interest payment jumps to over one trillion dollars.

How will we pay that size of a bill? Not to mention what good one trillion dollars would do in the hands of families to be spent within the economy. We will be required to pay higher interest rates because we will be a bigger risk.

When investors begin demanding higher interest rates to loan a spendthrift America, the game is over. Sure Bernanke and the Federal Reserve will print money as fast as they can, but that just devalues the dollar and pours gas onto the inflation fire that will burn through the American economy, family paychecks, and savings.

There is plenty of blame to go around. Every president since FDR is guilty. Both parties in congress are guilty. The point is affixing blame is not a solution, it is merely history. Harry Truman said there’s no such thing as the future, only history that hasn’t happened yet. Look to Europe to see America’s future if we stay on this path. 

Obama will have added $5 trillion to our debt (+41%) in his first term when he promised in his campaign to cut deficits in half. The left says he didn’t know how bad it was and had to spend the money to keep America from going into a depression. Rubbish. Obama spending is a textbook example that proves government spending doesn’t create recovery, or jobs.

The unemployment rate reported by the BLS was at 8.3% when the Stimulus was passed, and last week on the third anniversary of the Stimulus the unemployment rate was 8.3%. The rate is understated due to the methodology of calculating the rate by comparing the number of people out of work who are looking for a job (those who have given up are not counted), to the number of jobs available. A government hoax because we now have the fewest jobs in America since Carter was president, and over five million job seekers are no longer counted.

Gallup reports the unemployment rate at 9% and 19.2% when including the underemployed. Proof positive the Obama administration just wasted $5 trillion dollars that will now serve as an anchor on the economy that you will get to repay. Looks like $5 trillion doesn’t buy what it used to.

What does all this have to do with renting versus owning a home? The government is misleading you that the economy is getting better and that happy days are around the corner. The Obama sycophants in the media are accomplices to the crime by reporting those claims as truth.

If you are renting, here is the truth. Interest rates have never been this low. Home prices are down and affordable. There’s an abundance of homes for sale. This may be your last chance to guarantee a low cost for your housing going forward.

When inflation hits, not if it hits, rent prices will go up. When, not if, the economy goes into another recession due to Obama policies, many more families will lose their homes when they lose their jobs. Demand for rentals will increase again, and rents will go up, again.

If you don’t believe my analysis is correct and rosy days lay ahead, don’t buy a home today at historically low rates. The best case scenario is you will miss a once in a lifetime opportunity to buy a home with cheap money. The worst case scenario is you’re playing financial Russian roulette, and lose. 

The opinions expressed here are solely those of Fritz Pfister or identified sources, and not necessarily those of RE/MAX Professionals of Springfield or RE/MAX International.