Wednesday, January 17, 2018

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Wilderness Realty, Inc.

Maine Land Sales Specialists


August 13, 2010 by  
Filed under Land 101, Land Economics, Real Estate Blog, Uncategorized

Buy land now before inflation hits!  I am not usually pessimistic and I certainly do not wish for higher inflation.  Unfortunately recent events in the financial arena do not bode well for this rather distasteful scenario.

For over a decade we have been blessed with low inflation especially when compared to the late 1970’s.  The Federal Reserve has accomplished this by tinkering with interest rates.

Another Fed strategy to keep inflation at bay is to control the money supply.  The current administration is spending tremendous amounts of money at a never before seen historic high rate.  To account for this increased spending, the US government is printing money at an also never before seen historic high rate.  This has an effect of lowering the value of the dollar.

Over time this devaluation of the dollar will lead to inflation.  To counteract that, the Fed will increase interest rates; which generally have a negative effect on economic growth.

Under this scenario, prices for goods go up including land.  If you buy land now and inflation starts to increase in the future, so too will the value of your land investment.  This would be a good strategy to preserve the value of your money; turn your cash into land!  So instead of having a bunch of dollars losing value; you now have land increasing in value and in the future will be worth more dollars.

If inflation gets to be real bad, more people will buy land, which is a finite resource, and cause land prices to increase even more.  The sooner you become a landowner in the “inflation cycle” the better off you will be financially.

Although the current consumer mood is to hold back in these uncertain times, the continuing government spending spree and consequential increase in the printing of money makes a land purchase pretty attractive.