Kona Kohala Blog

If you've been considering buying property then now is the time.  Prices may still be on the way down but the rate of decline has slowed greatly.  Interest rates are being held down against their will; normally, long term interest rates like those on 15 and 30 year fixed rate mortgages follow the 10 year notes at treasury sales.  Recently, the fed has had to raise the interest rates in order to get buyers for a product in a market already saturated with those notes.  Long term interest rates should have gone up, too but haven't.

Instead of letting this market correct itself through reorganization, allowing some companies to fail and new ones take their place, and letting nature take it's course, the government has decided to micro manage our economy.

Historically, there has not been one government run project to ever make money.  Our government has never been in the business of making money, instead they tax us to pay for their programs and projects such as Amtrack, the post office and now GM.

Much like the Dutch boy with his finger in the dike, you can only hold nature and market movements back for so long.  Within the next couple of years we're going to see the market correct itself with no regard or respect for the federal government.  With all these Obamabucks floating around out there, the rest of the world is going to realize that the dollar is virtually worthless.

Already there is talk of switching from the dollar to some new third party currency for world wide transactions.  China and India, two countries gaining in the sway they hold over other countries in the world, are talking about using their own currency as a new standard citing their stability versus the dollar's.

When all this happens, inflation is going to rear its ugly head.  You can expect interest rates in the teens once again.  Just 30 years ago another left wing liberal who wanted to save us from ourselves, James Earl "Jimmy" Carter left us with 19% to 23% interest rates.  It took a conservative approach by Ronald Reagan to turn our country around and he did it by cutting taxes and government interference across the board and in 8 short years we were whole again.

This means that the best investment to have when inflation hits is not in the stock market or in CD's or in cash but in long term mortgages.  If you take out a 30 year fixed rate mortgage today, regardless of what inflation does in the future, your monthly payments are not going to budge even though the value of your holdings may be inflated through the roof.

Think about it, talk to your financial advisor then call us to see what property will fit into your new portfolio.  This is not the time to be waiting to see what's going to happen.  It is the time to take educated action so talk to your network and see what's best for you.