Proposed changes to the deed restrictions on this Penny Lane home include removal of income and asset caps, indicating market-driven shifts in local approaches to affordable housing policy.

Photo by John F. Russell

Proposed changes to the deed restrictions on this Penny Lane home include removal of income and asset caps, indicating market-driven shifts in local approaches to affordable housing policy.

Steamboat homeowners could soon buy out of deed restrictions

City Council could give final approval to housing policy proposal May 3

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— When U.S. Forest Service employee Rebecca Roof got a transfer to Arizona, she found it very difficult to get out from under her roof in Steamboat Springs.

What has unfolded since — the proposed removal of some deed restrictions on her West End Village home, with compensatory payments from Roof — indicates a changing approach to local affordable housing policy that could affect other homeowners facing similar challenges.

The city is considering a plan that would enable Roof to buy out of two deed restrictions, an income requirement and a net worth cap, for potential buyers of her home at 2357 Penny Lane. In order to maintain the community character behind affordable housing policies and the general intent of West End Village, though, the plan would keep requirements that potential buyers work in Routt County and live in the home as their primary residence.

The Steamboat Springs City Council gave initial approval to the plan April 5 and could give final approval May 3.

Mary Alice Page-Allen, asset and program manager for the Yampa Valley Housing Authority, said 41 of the 72 West End Village lots have deed restrictions. Although Roof’s request arose out of the special circumstances involving her job transfer, Page-Allen said the process could set a template for future, similar requests from other homeowners.

“One of the things that we’re real cognizant of here is that we don’t expect this to be the only one,” Page-Allen said. “I don’t see a stampede happening, but I do see some others coming.”

She said the challenge would be creating a process that’s fair and equal for different homes with different restrictions in different neighborhoods. Two similar requests recently have arisen from owners of condominiums in Sunray Meadows off Village Drive, for example.

Roof would have to pay about $2,300 under the proposal to compensate for preferential, below-market financing she received when buying the home on the city’s west side in 2007. Thirty-four of West End Village’s deed-restricted units received preferential financing, Page-Allen said.

Some deed-restricted homes in other neighborhoods received substantially greater purchasing discounts and could have a greater cost to buy out of deed restrictions, she said.

“I think that regardless of why the request comes forward, we had to develop some kind of process to say, ‘Here’s how we analyze it’ and treat everybody equally,” Page-Allen said. “We have to treat each development equitably.”

Broker associate Sharon Pace-Ward, of Prudential Steam­­boat Realty, said she has an offer on Roof’s home, contingent on the amended deed restrictions.

“I think this is a big victory for all of West End Village, while still preserving what they’re trying to preserve,” Pace-Ward said, referring to the neighborhood’s community character goals.

City Manager Jon Roberts said discussions about removing deed restrictions under special circumstances began last year.

Steamboat Springs Finance Director Deb Hinsvark said the potential policy changes are driven by the drastic changes to the real estate market since deed restrictions were implemented several years ago.

“Deed restriction is an effort to keep real estate at an affordable price. The problem is, the current market has dropped below that affordable price,” Hinsvark said. “It’s more a consideration of where we are in the market right now, I think, than anything else.”

— To reach Mike Lawrence, call 970-871-4233 or email mlawrence@SteamboatToday.com

Comments

hereandthere 3 years, 8 months ago

What about the folks who bought their property at market value? Seem to recall that the difference between deed restricted values and free market on lots at West End were considerably more then $2300.

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ybul 3 years, 8 months ago

Seems to me that without an appraisal of what the house is worth with the restrictions and without them, one will never know what the payment should be. $2300 seems awfully low to remove those restrictions, no matter wether or not the price of the house is below the "affordable" price.

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Scott Wedel 3 years, 8 months ago

And so continues the fiasco that was affordable housing in this valley.

These deed restrictions were noted at the time as being so complex and limiting that it was going to be hard for a seller to find a buyer and so it comes to pass. And now the solution is to have the owner basically pay a fine for being dumb enough to accept these deed restrictions in the first place and to remove the deed restrictions.

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Fred Duckels 3 years, 8 months ago

I doesn't matter, get this thing over with, and innoculate all newborns with an anti social engineering vaccine. The do gooders responsible here have all evaporated by now. Send us the bill as it has to be paid, but let's put this nightmare to bed.

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Steve Lewis 3 years, 8 months ago

The ENTIRE HOUSING MARKET is a "fiasco". This is no different.

There are millions of buyer decisions that look "dumb" now. Hundreds of policies that look "dumb" now.

In hindsight, its so easy to write critique that makes people look dumb. But few would see any value in it.

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1999 3 years, 8 months ago

I don't think the people that knowingly took part in the deed restriction guidlines were dumb.

They had the choice to take a gov backed loan at a far lower % rate than they would have been able to get on the open market. If at all.

Even if they have to pay 2500 to get out from under the deed restrictions I suspect what they have saved on % rate on their mortages far outweighs the 2500$ fee.

then they are able to sell to whomever has the most money not to whomever has the least.

sounds like a winning situation to me. far from a fiasco.

Though I admit it does nothing to help the future afordable housing prospects...but it helped those people in West End get into the housing market when there was little hope that they could.

I see that as a good thing..

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Scott Wedel 3 years, 8 months ago

Yes, it is different because it is government imposed fiasco. This is the property sale that now requires the city council to take actions to allow it to happen.

And these deed restrictions were called dumb at the time and now they worked out to be dumb. Big surprise there. They always had the issue of net worth and income restrictions limiting the number of potential buyers.

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Scott Ford 3 years, 8 months ago

Almost every mountain community that has used "deed restrictions" as a means to assure an on-going supply/inventory of "affordable/attainable" housing has encountered a very similar situation. The owner of the deed restricted house will have some type of "special circumstance" that they feel warrants that they be released from the contractual restriction they agreed to in order to sell the home. -

This was the experience that Breckenridge had in its mix (deed restricted / non-deed restricted) neighborhoods. Regardless of real estate market conditions, why did we think our experience was going to be different?

Once we start down this path of giving exceptions, we can expect a host of hard luck stories from the owners of deed restricted housing. The stories will be touching to be sure ranging from sick parents to, " I got a job somewhere else and the deed restriction is making the home hard to sell. Hey, because of this special circumstances you should let me out of the deal." Rest assured soon everyone wishing to sell their deed restricted house will have a touching story and a compelling need.

Next we can expect to hear that the "Yampa Valley Housing Authority (YVHA)will view each of these request on a case-by-case basis, making Mary Alice Page and the housing authority board a group of ill equipped social services counselors to people that for the most part have left the area or will soon be leaving. We can expect YVHA to say, 'YES" to every single one of them. Essentially putting an end to deed restrictions as a failed "affordable/attainable housing" inventory maintenance experiment.

Here is an idea. Why not calculate what the value of removing the deed restriction on each of the deed restricted homes in Steamboat Springs? Give the current deed restricted homeowners 24 months to buy out of the deed restriction on their home or forever shut-up. Use the buyout monies to fund the down payment assistance program because it works and is not nearly as silly or as complex as deed restrictions are..

What were we thinking when we went down the deed restriction path? The truth is we were not thinking! Fred, you were right again.

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1999 3 years, 8 months ago

I see both sides.

while it might be a possible boon for the owners NOW it clearly doesn't adress a continued use of affordable housing.

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Steve Lewis 3 years, 8 months ago

What were we thinking when we went down the deed restriction path? We were thinking it made a lot of sense.

Enough sense that we had a community established goal of allowing workers to live here. Every Colorado resort community preceded us in making a real effort. At the same time we were watching 100's of cars driving workers from Moffat County everyday.

Every city council of the previous decade recognized that deed restrictions were the only way to keep any given affordable units as affordable going forward. Otherwise the effort for each unit would have to be repeated, and that would have been dumb too.

Things have changed in very fundamental ways. And the need has evaporated. Who saw that coming? Fred? Scott F or W? Hardly. Nonetheless your minority opinions now have a recession to stand your arguments on, because there is zero demand.

First Tracks was likely the first in Steamboat to reverse its deed restriction obligations. That move let the developers of both One Steamboat Place and Wildhorse Meadows off the recession hook for about 80? units. Howelson Place, and other projects downtown followed suit.

These deed restricted individuals that are now considered deserve the same reconsideration.

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Scott Wedel 3 years, 8 months ago

I saw that these sort of deed restrictions were a bad idea at the time. So did Fred. We did not know the exact circumstances that would expose the idea, but there was only one very narrow set of circumstances (current situation continuing into the future) that could have allowed them to work as intended. Anyone familiar with the free market knows that was the least likely future outcome because markets are dynamic, not static.

They were thinking that they were smarter than the market. Those sort of deed restrictions were noted at the time as being a bad idea because of the income and net worth restrictions. And now that lending requirements are stricter then those restrictions cause the maximum mortgage is far less than a few years ago.

It is possible to have programs that work such as down payment assistance which creates a lien to be repaid and are written to capture some of the property's appreciation so that when it is repaid then it will have moved with the market to be able to provide a down payment for another buyer of a similar property.

Actually, if the real goal is affordable housing that locals can afford then they should enforce those deed restrictions. How far the price would have to come down to find people that meet the deed restrictions would definitely be affordable housing.

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Steve Lewis 3 years, 8 months ago

Scott, you did argue in the past against deed restrictions. At the same time as you argued for down-payment assistance. Fred on the other hand argued against affordable housing assistance altogether.

Your comment surprises me: "if the real goal is affordable housing that locals can afford then they should enforce those deed restrictions". You do see some use for deed restrictions under some circumstances?

Its a moot need today in my opinion. So Fred so does get to be right, but only because the free market stumbled so horribly. Not because his compass was working.

I disagree deed restrictions relied on a narrow set of circumstances. All they needed was growth, and appreciation over time. But a narrow set of circumstances, like Routt values dropping each of 3 consecutive years, did make made them onerous.

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Scott Ford 3 years, 8 months ago

Hi Steve - When the two "Scotts" become involved in the exchange, you would be doing all of us a huge favor if you referred to us as Scott-W or Scott F.

You and I agree on a number of social issues but when it comes to housing, we both know that our opinions diverge. I know that previous planning commissions and city councils saw deed restrictions as the way to maintain an on-going inventory of "affordable/attainable" housing units in the area. They were wrong and the best thing they could have done was never get involved with the issue in the first place. Some problems goverment intervention cannot fix.

It would not have matter in good times or bad real estate environment the owners of the properties with deed restrictions eventually begin to chafe against them. It was only a matter of time before we would have been faced with a host of hard luck stories. In the beginning, we would have said "yes" to only a few because of unique extenuating circumstances. Slowly but surely the flood gates would have opened. The biggest opponent to deed restrictions is not Fred, Scott W or me. It is the the folks have them and wish they did not.

Your "beef" should be directed aganist Rebecca Roof for not wanting to live up to a contractual obligation that is the cornerstone the whole concept of "deed restrictions" is built upon. She is the worst enemy of deed restrictions much more so than the two Scotts and Mr. Duckles.

To put it as simply as possible, deed restrictions as we have structured them do not work over the long run. This is because it is usually in the self-interest of the folks that own the deed-restricted property to find a way out of "the deal." The vast majority of humans (including those that live in Steamboat Springs) will behave in ways that serve their self-interest first and foremost. Trying to "engineer" something different from this reality rarely works although at the beginning it sounds great in theory.

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Scott Wedel 3 years, 8 months ago

Steve, Well, if the true priority is affordable housing then they could be merciless and say the deed restrictions remain. Imagine how "affordable" the price will be then. Might only require current owner to turn property back to the bank and let the bank take the bulk of the loss, but the result would be a very affordable house. It would be so affordable because the deed restrictions are so unpleasant.

Sort of like how having a deed restriction that there must be a pile of dog poop in the middle of the living area would also result in a very affordable house.

Yes, I argued that if public resources must be spent to create affordable housing then it should be in the form of down payment assistance. Fred didn't see the need to spend public resources to create affordable housing. That is not wrong on the facts, but his opinion regarding appropriate public policy. The continued incompetence of local affordable housing advocates has convinced me that it is appropriate at this time to oppose government supported affordable housing in this region. I have seen it done well elsewhere, but not here and no one here appears to see the need to see what has been proven to work and not work elsewhere.

And the deed restrictions needed more than the future being a continuation of that present situation of a nice continued appreciation. It also required a future of historically easy mortgage terms and low interest rates. If the future was a more typical housing correction with mortgage rates close to 10% then the deed restrictions would also have become onerous.

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steamboatsprings 3 years, 8 months ago

This was a mis-directed experiment at the time and it is commendable that the city recognizes the effect it is having. The council at the time said we want to avoid becoming like Vail and Aspen but for some reason tehy thought that doing the same thing as those two towns would have a different effect. I don't think they were that dumb but what became clear from Steve Aigner's speech was that what they really wanted was no-growth and thought the people of Steamboat were too dumb to know what was best for themselves. Fortunately the people of Steamboat are quite a bit smarter than them and voted out that whole crew even before Steve made things entirely clear. Too bad Steve L. doesn't seem to understand that.

to the issue at hand there remain more reasonable restrictions that limit ownership to Routt county residents. If we decide as a community that maintaining a stock of affordable housing is a priority (I strongly believe it is) we need to provide it ways that do not distort the market and share the costs across the community not on the last ones in as before which priced market rate affordable housing out of reach much faster that the program could hope to create deed restricted affordable housing.

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Steve Lewis 3 years, 8 months ago

Hi Scott Ford, Yes we disagree. Housing reality today is a the worst performing fundamental of our entire national economy, and more so locally, so we are both building pure conjecture here. There is no proof of 2006 wisdom or folly that isn't recession related.

I feel with continued appreciation in Steamboat, there would be a market for deed restricted (DR) units. There have been several re-sales of DR units such as in Fox Creek. DR units have seen less foreclosures as well.

I think your argument rests in the crash. If 2005, 06, 07 price appreciations on the order of 15-20% were followed by relatively mellow appreciations in 08,09 and 2010, of say 10%, no one would be arguing the City should never get involved with the issue in the first place. Yes there were issues to fix. But the program would be increasingly popular in the face of continued rising home prices from the very high 2007 level.

Owners chafing against their deed restriction (DR) in better circumstances would not be a real threat to the program. Live with it and abide by your terms. In pre-recession circumstances demand would bring buyers, as we saw happen. There have been post recession DR buyers as well.

My beef is not with Rebecca Roof. I support her request.

First, I think Rebecca has the same rights as Trappeurs Crossing and Howelsen Place developers, among many other developers, who preceded her by reversing their own deed restrictions completely. Why release only the big boys? She could present the same argument exactly.

Second, the game is changed. What made sense before the crash and worked in many communities, makes less sense today. Prices are falling. Deed restricting new units makes no sense to me at all today. Ask me in 5 years, or 8 years. But I see no need to leave Rebecca tied to the deal that no longer fits. Mary Alice is taking the right course to seek mitigating policy for Rebecca and her peers. Some policy such as the article mentions seems entirely fair.

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Steve Lewis 3 years, 8 months ago

stbtsprings, You may be right that we still need AH stock. Rentals would make more sense to me, but I'm too unsure of our market needs today.

Yes AH asked "the last ones in", i.e. developers, to build AH. I would point out that development was our largest industry. It had both the most $$ to do this work and also had the most employees to house.

Your take on the recent past politics is hard for me to follow.

In particular, your feel that some, led by Steve Aigner, "thought the people of Steamboat were too dumb to know what was best for themselves". Please explain how a group with such an arrogant attitude would seek a ballot trusting that "the people of Steamboat" could decide SB700 for themselves.

And next, why would the council that you supported be voting AGAINST letting the people have a ballot? Don't you have your complaint backwards?

When you state "the people of Steamboat are quite a bit smarter than them", how does that acknowledge that the SB700 ballot result overwhelmingly agreed with "them", and disagreed with your council?

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Fred Duckels 3 years, 8 months ago

I thought that my years of experience might have given me a touch of wisdom but I now understand that it was just dumb luck. Who would have thought that economic activity might be cyclical? We have world class rationalizing involved here to cover the tracks of these self appointed visionaries.

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Steve Lewis 3 years, 8 months ago

Sorry Fred. I'll still have to disagree with your compass if you intend to equate the events of this "great recession" with cyclical economic activity. Maybe if the cycles are every 80 years.

And your comments have consistently been there never was any need for workforce housing. Obviously I'll disagree with you there too. Probably even have majority opinion on my side considering 05,06, and 07. I think you are right today though.

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housepoor 3 years, 8 months ago

"But I see no need to leave Rebecca tied to the deal that no longer fits. " So I suppose you see no need for anyone who is underwater on their property or real estate investment to simply stop paying and walk away?

Check the foreclosure listings there are many prominent members of the community walking away from their property because it no longer fits and 2 weeks later you see them in a new 80k suv.

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pitpoodle 3 years, 8 months ago

"Best thing they could have done was never get involved with the issue in the first place. Some problems government intervention cannot fix." I agree and the voters agreed by voting out the last council. Good. Government intervention is not a substitute for the market, nor anything else, as we are in the midst of seeing for ourselves with the federal government's antics.

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Fred Duckels 3 years, 8 months ago

Steve, This last bubble was a product of affordable housing and we decided to double down. I am in the process of going through five downturns and they all have the same scenario, sometimes more severe than others. I never saw the wisdom in AH nor did I get into the real estate fiasco. Given the cyclical market history it appeared very risky, by staying out I might miss out but I wouldn't crash and burn.

It appears that many were shortsighted and plunged in. Our planners, elected officials, visionary ideologues, and others wishing to align with apple pie all joined the Lemming stampede. The market could care less about who meant well. Now we must clean up the mess, but listening to you all seek safety in numbers for an excuse is nauseating.

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Scott Wedel 3 years, 8 months ago

Steve, As Fred noted, these deed restrictions would have been troublesome for the owners in any of the 5 downturns experienced by Fred. Sure, this is a worse real estate downturn that others, but locally it is comparable to the bust of the 70s in which both large new developments at Steamboat Lake and Stagecoach Lake went bust prior to completing infrastructure. Condo and housing prices also plunged locally.

Also, by the nature of the income and net worth limitations, any change in availability in mortgages, in particular a return to historic standards of 20% down payments and higher interest rates would have also been very tough on selling deed restricted units.

I consider the continued inability of AH advocates to recognize market forces and their mistakes as what is wrong with local AH efforts. Instead of admitting local efforts failed and researching the programs that weathered the change in the economy well, we keep hearing how what they did was right.

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Steve Lewis 3 years, 8 months ago

housepoor, My comments support the City adjusting the deed restriction. A similar step to re-negotiating a mortgage. I've made no suggestion that anyone "walk away".

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Steve Lewis 3 years, 8 months ago

Scott, Existing DR unit owners are seeing fewer % foreclosures than the free market has. Existing local DR units, such as in Fox Creek, have sold since the crash with their DR's in place. seems fair to call that "weathering the change in economy". So I'll disagree with you that the effort was a failure. Its still serving most of its owners well.

I have agreed about one big failure - the YVHA debt on its Elk River parcel. This event will not be "weathered". I've argued its the same predicament that many free market projects encountered. You've argued government shouldn't go there. I believe it should have because the free market wouldn't. But the majority is on your side, more so in today's circumstances.

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Steve Lewis 3 years, 8 months ago

YVHA is probably 1/3 of the overall effort considering units built, with the remainder coming from City regulations. The problem that existed there was that DR units brought on to the market during the crash could not be sold. The regulations allowed an escape clause in that event, and the units reverted to free market. There was no public loss. The developers got a decent windfall that likely erased the red ink significantly or entirely.

This latter case saw the same problem as the free market with demand shrinking, and loan availability for buyers all but gone.

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Steve Lewis 3 years, 8 months ago

Huh. I will vote for their tax, reasons already given. So it probably won't matter to you, yvb, that I spent most of my YVHA time arguing against their board's decisions. Ed Macarthur, past president, and I rarely see eye to eye.

So of course, there I am supporting a $80/year tax for his organization and he is not. Bizarre.

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Steve Lewis 3 years, 8 months ago

But I was very involved in the City's regulations. Completely true. That regulation included an “escape clause’ that has released pretty much every development from their DR obligations, and allowed those units onto the free market. At worst I'd say the regulations slowed projects down. Where is the failure there? Anyone feel we built too few units in 2007?

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Steve Lewis 3 years, 8 months ago

I’ve already disagreed with deed restrictions going forward, because this housing glut here flattens prices as far as I can see. And DRs won’t happen, because we diluted the regulation to the extent that no ownership units will be built anyway.

So the one negative result of the AH effort is the YVHA debt. That’s it.

The rest of this is a years old argument, from the same opponents as before, reasserting itself on the proof one parcel’s debt during a great economic crash, involving the near collapse and huge contraction of our banking and loan industries on a scale not seen since the Great Depression. That’s certain proof of affordable housings' past ineptitude and current failure?

Baloney.

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ybul 3 years, 8 months ago

Steve said - "Maybe if the cycles are every 80 years."

If one looks at economic history and Kondritiev Wave theories, there are short cycles and long cycles. The long cycle last about that long, the fed has juiced the economy for a long time trying to keep her afloat. However the debt cycle must purge itself sometime.

The long cycle typically runs two generations or about 70 years as it takes a while for those who lived through the last depression the 30s to be outweighed by those who did not.

Debt is the problem and the federal reserve is fighting hard to stop a deflationary period from occurring.

I suspect that the US will see inflationary pressures for need items food and energy and deflationary in want items a posh house, computer, etc.. That is if and only if the federal government gets its act together and reigns in spending and rights the debt problem in this country - most likely need is to pull our troops out of the 130 odd countries they are in today and pull out of all wars. If not then we could head the way of Brazil prior to the REAL being instituted as their primary currency and their formation of a government based upon the founding principles of our country, hyperinflation, which would not be good for anyone excluding those who desire dictatorial control.

Why not go the way of the German republic of the 20s and their hyperinflation?

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Kevin Nerney 3 years, 8 months ago

ybul-- I agree with the numerous posts by you and others that we should no longer be the policeman of the world and should bring our serviceman home from various countries and outposts around the globe. However, with that said what do we do with the million? or so military returnees, pay them unemployment, let them become homeless to wander the streets? I don't have an answer just more questions.

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ybul 3 years, 8 months ago

YVB, Inflation is a result of both the printing of money and credit expansion. Unfortunately the federal reserve no longer gives states for M3 which is the combination of the two. From my understanding M3 is declining while M1 (currency in circulation) is increasing. From my viewpoint that will lead to inflation in need items (those bought with cash generally Food-Energy-Comodities) and deflation in want items a new 55 inch TV or a McMansion (some may only deflate in terms of real world purchasing power, which I am sure is the desired outcome of the money changers - given that it is Easter weekend it is fitting to state that the only time the bible mentions Jesus getting upset was over the money changers - seems we have been fighting this fight forever).

Kevin,

If we quit taxing employers on the employees they employ for unemployment benefits, as opposed to the machines that put people on the unemployment lines then maybe we could find jobs for plenty of people. Personally, I could probably put 20 people to work if I did not have to fight an unfair fight because of government subsidies in agriculture. (though I would not want to employ them, I would desire that they ran their own enterprise within my whole.

Pax

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