Australian Bureau of Statistics

If you’re one of the many Money Morning readers suffering from property and housing withdrawal symptoms then don’t worry, because this morning we’re back on the bandwagon.

And if you’re one of the many Money Morning readers who’s glad we’ve stopped banging the housing drum then all I’ve got to say is, “Sorry, we’ll have a non property article for you tomorrow.”

Since we last stuck the boot into property a couple of weeks ago there have been more ridiculous headlines from the property spruikers than we could eat.

We had intended on keeping a record of them, but we figured it was a waste of time as it’s basically the same story being recycled every day:

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A quick follow on from yesterday’s Money Morning. We like this quote we’ve found from Professor Walter Block:

“Consider a man and a woman each with a productivity of $10 per hour, and suppose, because of discrimination or whatever, that the man is paid $10 per hour and the woman is paid $8 per hour. It is as if the woman had a little sign on her forehead saying, ‘Hire me and earn an extra $2 an hour.’ This makes her a desirable employee even for a sexist boss. But when an equal-pay law stipulates that she must be paid the same as the man, the employer can indulge his discriminatory tendencies and not hire her at all, at no cost to himself.”

This example is applied to a comparison of male labour versus female labour. As was our article yesterday.

But in reality, it’s not even a Male v Female thing.

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We’ll poke a stick at property and inflation today.

Inflation, if mixed with deflation is fine. Prices rise, then prices fall.

But inflation by itself, well, that isn’t good at all. If you look at the chart below, you can see perfectly how the value of money has been devalued almost without break for the last fifty years:

According to the Reserve Bank of Australia (RBA) numbers on Money Aggregates, the M3 money supply has increased from the equivalent of $6.7 billion in 1959 to $1.19 trillion by the end of 2009.

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Before I get on to today’s Money Morning, we’ve received some feedback from yesterday’s article. The complaint has been that we didn’t compare apples with apples.

That it’s not fair to compare the return of a leveraged investment property with an unleveraged dividend paying stock.

Of course that’s nonsense. Of course it’s fair. As we pointed out in yesterday’s article, the over-riding sales pitch for property investors is the benefit of negative gearing. That you should borrow as much as you can in order to be able to get the biggest tax advantage.

The property spruikers can’t have it both ways. When was the last time you heard a property spruiker tell you that you should only ever pay cash for a property? Hmm, thought so!

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