Eight Global Trends to Watch that Will Impact the Land Market – Week 5

Both the Yuan and the Euro Have Declined:

While the Chinese government has greater control over the value of its currency (Yuan) than the European Union has over its currency (Euro) the fact that both of them have declined slightly is significant. However, in both cases, if the devaluation was purely based upon the reality of each of those economies the devaluation driven by the foreign exchange traders would be much more severe than has occurred to date.

Should the Yuan or the Euro or both devalue significantly more from current levels, it will have more of an impact on those respective economies than on the American economy. A strong dollar is a safe haven. That is one of the benefits of the USA being the Hegemon.

The reverse is true when a currency goes into free fall. In that case the host country experiences rampant inflation such as seen in Venezuela, Zimbabwe, and other socialist/communist countries are experiencing (100% per day in Zimbabwe, 2,000,000% in Venezuela).

Based on their economic situation, both China and the European Union currencies most likely will devalue significantly. One of the results will be more capital flowing into the USA.

Although this money flow is “Hot Money” it will impact our real estate values. A “Bubble” is possible but distortion is absolute.