One of the economists at First Trust Portfolios Brian Wesburg believes inflation will average 3% to 4.50% over the next 18-24 months. If he is right we will see mortgage rates < 5% and probably 6% in the next 2 years. Why? Our M2 Money Supply has increased by 27% over the last 12 months, the biggest increase since the beginning of WWII. Second, prices on nearly every commodity has soared because of this. Third, Brian shows a chart in this video of M2 Money Supply and in the 70’s our money supply increased by a robust 14% and guess what happened? Inflation soared and mortgage rates hit nearly 20%. So, if a 14% increase in money supply lead to mortgage rates of nearly 20%, imagine what a money supply increase of 27% might do? Damn scary to think about.
Video: https://www.ftportfolios.com
