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marketeye
Veteran Advisor

Prices Don't Stop $13,000+ farm sale

Look at the quote about the markets in this land sale story. Wow! I don't know if I agree with ignoring the markets, while paying this much for land.

 

Illinois farmland sold Wednesday for prices reaching as high as $13,879 per acre, as more than 200 people jammed into the Knights of Columbus Hall in Springfield for a Murray Wise Associates auction.
 
The auction of 775 acres of high-quality Sangamon County land brought a total of $9,037,000, or $11,661 per acre, according to Joe Bubon, president of the auction company. “Investors and operators alike are willing to look past current commodity prices and act on the long-term value of good land,” he said.
 
 “We had both farmers and investors competing vigorously for this land, and ultimately, the nine tracts of land were divided among seven bidders. Interest was widespread, with a number of large investors from other areas bidding. This level of competition pushed prices higher than we’ve seen in a while. We had a 107-acre tract go for $13,879, and an 80-acre tract sold for $13,313 per acre,” said Bubon. A tract of 109 acres sold for $12,798 per acre.

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16 Replies
timetippingpt
Honored Advisor

Re: Prices Don't Stop $13,000+ farm sale

Unintended consequence of unlimited currency creation coupled with ludicrous negative interest rate policy coupled with massive subsidies for crop insurance and ARC/PLC coverage underneath.

 

Land with no debt will throw off $200 to $300 ($250 avg) an acre free cash flow this year capitalized at 2% gets you $12,500 dirt.

The rich get richer and the poor's food stamps won't buy anything.

 

Almost forgot, an effective zero tax rate on inheritances make this pretty easy as well.

r3020
Senior Advisor

Re: Prices Don't Stop $13,000+ farm sale


@time:thetippingpoint wrote:

Unintended consequence of unlimited currency creation coupled with ludicrous negative interest rate policy coupled with massive subsidies for crop insurance and ARC/PLC coverage underneath.

 

Land with no debt will throw off $200 to $300 ($250 avg) an acre free cash flow this year capitalized at 2% gets you $12,500 dirt.

The rich get richer and the poor's food stamps won't buy anything.

 

Almost forgot, an effective zero tax rate on inheritances make this pretty easy as well.


Yeah. Be nice of the government to step in take the money from the family and give it to the rest of us. That would get my vote. I'm feeling the Bern.

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roarintiger1
Honored Advisor

Re: Prices Don't Stop $13,000+ farm sale

You won't need Bernie.........If you are on welfare, you'll get a portion of the capital gains the sellers will be paying.  Smiley Wink

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timetippingpt
Honored Advisor

Re: Prices Don't Stop $13,000+ farm sale

3020.... I was not advocating tax increases. I was merely attempting to easily explain the price of farmland being well above its earning capacity. It is a mystery to me that so few can see the long term destruction wrought by the global currency mgmt scheme currently being implemented. It is so radical that it wouldn't even of been discussed as possible by academics as recently as a decade ago.

 

This kind of abuse and wreckless destruction of the value of savings is the type of stuff that can end civilizations.

r3020
Senior Advisor

Re: Prices Don't Stop $13,000+ farm sale

We are reaping the fruits of socialism. It starts out fine and there is enough for everyone. As time goes on those on the lower end are squeezed out as those on the top must look out for themselves.

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timetippingpt
Honored Advisor

Re: Prices Don't Stop $13,000+ farm sale

Very well said 3020. I hadn't quite thought of it that way.

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dekusb
Contributor

Re: Prices Don't Stop $13,000+ farm sale

In Canada China is buying farmland as well as other real estate, pushing prices to extremes as money searches for investments, and apparently China has lots looking for a home. Not necessarily the "fruits lof socialism".

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hardnox
Advisor

Re: Prices Don't Stop $13,000+ farm sale

Analysis of history is tough because you have to decide where to start and in reality you have to go back to the big bang to cover it all (I've disqualified everything to come in 3020s mind by citing that theory on creation, I'm sure).

 

But anyway, Reagan appointed Greenspan and almost immediately, the stock market crashed, threatening the most popular and tangible evidence of an economic boom. Greenspan intervened massively and the market recovered the losses fairly quickly.

 

GHWB re-appointed him and he handled the monetary side of the unwind of the (to date) biggest financial crisis and crime wave, the S and L crisis. Ironically the mild recession that followed led in part the unexpected election of Bill Clinton.

 

Clinton re-appointed him twice and as a minority elected president, the only thing that kept him in office was a booming stock market, abetted by Greenspan and a clinton/gingrich neoliberal agenda. By 2000 everyone was certain that they were going to be rich beyond their wildest dreams.

 

GWB re-appointed him and he began work on dealing with the Old Maid that Clinto had passed down. He initated the ultra-low interest rate regime which drove the dollar sharply lower that eventually engendered $trillions in carry trades of short dollar/long commodities.

 

Meanwhile, knowing that the jig was up, the PTB prepped the world's greatest academic expert on the Great Depression-Bernanke- as the next Fed Head.

 

The whole thing did blow up and Bernanke led the massive intervention under Bush and the recovery efforts under Obama.

 

Back to the top- I didn't start at the right place. Need to mention that Volker killed inflation by strangling the economy with rates approaching 20%. When he finally let his foot off the nation's throat, a 35 year general decline of interest rates began which has been the air under the wings of asset inflation throughout the entirety.

 

Now we are completely addicted to asset inflation and ultra-low rates. There will be various attempts to beat that bound but they will ultimately be unsuccessful- 0 means 0. It's a math thing. But can kicking can go on longer than you think.

 

The primary means of upward wealth transfer has been asset infation, coupled with tax cuts and de-regulation (and ignoring existing ones). But the people who were left out are more screwed than anybody if asset deflation takes hold.

 

FWIW, the purpose of this narrative is to point out that liberalism didn't drive this game. Neo-liberalism did- and that's actually a confusing misnomer because it is actually a conservative philosophy that merely brings different suckers into the game.

 

So everybody can sit on the cracker barrel and rail about liberalism and probably impress their peeps with what virtuous men they are but the truth of the matter is that the culprit is you, you, you, and me.

 

 

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hardnox
Advisor

Re: Prices Don't Stop $13,000+ farm sale

PS

 

There are limitless creative ways for anyone to create a narrative whereby they are utterly virtuous, have no blame in the matter and couple fix it easily tomorrow if they were named dictator.

 

The most common one goes something like, well, things were so terrible in the 60s-70s when the old GI Generation New Deal Libs were still running everything that we had to do something, and it was all a smashing success, except.....

 

There was a need for the pendulum to swing back some. But that was all 35 years ago and the pendulum swung back and got stuck.

 

And it ain't working, and isn't going to get fixed by doubling down on neoliberalism.

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