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Advisor

Re: Would u pass on the farm?

My thoughts, worth what you're payin'.

 

A healthy dose of testosterone on display in the comments thus far. I'd try to eliminate emotion from the decision as much as you can.

 

As much as anything to do with "the market" it probably is a question of to what degree the government will be willing or able to bail the purchase out at least a couple times over the 20-30 year term of the purchase. Recent and not so recent history says they will and the current political trends continue to suggest that the agribusiness lobby has purchased a prime seat at the table.

 

History suggests that nations in decline tend to continue to throw their resources into the maintenance of previously sunk malinvestment.  It also hints that can go on a lot longer than you'd think, although not forever.

 

 

 

 

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Senior Contributor

Re: Would u pass on the farm?

Time,
If the dollar is its way to zero is that an indication of some serious deflation or that it will just take more dollars to buy real goods.
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Senior Contributor

Re: Would u pass on the farm?

Nox.
By that being said if one has enough cash to put down to enable the farm to support itself at todays govt support revenue then why not I suppose.
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Frequent Contributor

Re: Would u pass on the farm?

In my area land is still over 100 per csr point with a couple good farms going going for 125 per point.I passed on a low quality farm that hooked on to a corner of mine and ended at a river bank because I have seen too many years of poor crops over the fence.If the investor that bought it can get 400 an acre rent he will have a 2% return,if not nobody will make money because of the high cost of growing crops now.There may be a perfect square 40 acre field on the market later this year,if one of the neighbors that already has a thousand acres paid for buys it and pays cash he will make money every year after,but if corn stays at 3,00 and beans drop to 7.00 poor quality ground will lose money half the time

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Honored Advisor

Re: Would u pass on the farm?

It could have been a great question and I would have put in some serious things to think about.

 

I did not see a serious "I want help or guidance" inquiry here. Way too vague with too little info to postulate a response with a meaningful helpful answer.

 

Of the six farms I have purchased only two were worth the money, the rest were "overpriced" .

 

As mentioned the biggest regrets were the ones I didn't or couldn't buy.

 

I agree with you in the fact that cash is trash. The flip side of that is the new political thing is theft by ballot and what is happening to property taxes.

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Senior Advisor

Re: Would u pass on the farm?

Man, didn't intend to make a comment on this subject but the 'cash is trash' made me laugh! We're right on the edge of devaluation, showing no signs of inflation, the $US strong. In this scenario one could invest in just about any long term asset and then lose it because of onslaught of lower prices and currency movement down to a trickle where making ANY payments would be difficult and asset values cause almost any investment to decline to the point where a loan would be in auto default and couldn't be resold except at a radically lower 'fair value.' Cash would be king.

 

I'm not saying we are going in to the abyss at this point. At least not until a black swan shows up. I don't have a schedule pamphlet for that. But between deflation/inflation we're so much closer to deflation right now. Doesn't have to be tripped by us. Like WWI it could come from another direction.

 

Good luck on the 'cash is trash' for the next decade or so.

 

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Senior Advisor

Re: Would u pass on the farm?

I will say I'm intrigued with the idea that government bailouts are the backstop for ag. Definitely an argument that deflation is a real threat.

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Frequent Reader

Re: Would u pass on the farm?

More replies then i thought would get thx for all of them.  I know I was vague on a lot- it is good dirt- moderately close to home have livestock so can put some manure on also need some cornstalks so I have a  fudge factor to justify overpaying alittle.  If I could buy and have a reasonable (rent) payment that would be fine but this is quite high.  Not saying not going to make a good offer just cant mortgage up everything to get it.  Thanks again

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Honored Advisor

Re: Would u pass on the farm?

You might have misunderstood me Pal...I am not in the cash is trash camp at all. I am merely in the camp that notes the gov is devaluing the currency by about 3% a year on purpose. This is before we even consider the printing of debt to cover bad debt to cover more bad debt and spending. The social democratic model is bankrupt. Some day the currency issued by it will be worth zero. Like you, I have no idea when. The trend is just not reversable.

 

Having been extremely bullish on the value of the dollar index (which is not the same as the purchasing power of the dollar), I agree that the US currency is the best on the planet. Doesn't make it any good long-term though.

 

18 years ago, a dollar would buy x amount of farm ground, or silver, or pick something. Today, the same dollar buys about 1/5 of the same asset. So, holding dollars has been a bad idea. I just don't see this trend being reversable with current global leadership and thinking.

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Honored Advisor

Re: Would u pass on the farm?

Inflation: From 1 Króna to 10,000 in 60 Years

BY ALËX ELLIOTT
 
Money - Icelandic Króna

Photo: Páll Kjartansson

Inflation in Iceland has run at an average of nearly 16 percent per year since it first started being measured.

That means that things which used to cost ISK 1 about 60 years ago now cost nearly ISK 10,000. The situation is very different in neighbouring Norway, however. Their NOK 1 items from 60 years ago would now sell for NOK 24. A big difference by any standard.

“High persistent inflation brings wealth to society unfairly, even randomly,” says Breki Karlsson, director of the Institute for Financial Literacy. He told RÚV he remembers when he was a child he could return glass fizzy drinks bottles and buy an ice lolly for the deposit. “In 35 years the value of the bottle tripled, however the ice lolly has increased in price more than twenty-five fold.”

Breki points out that since records have been kept, inflation in Iceland has averaged 15.6 percent per year. “That means that prices double, on average, every four-and-a-half years. Things which cost ISK 1 sixty years cost ISK 9,600 today.”

By comparison, Norwegian inflation has averaged 4 percent over the last 60 years, which means that prices double every 15 years, instead of the 4.5 years in Iceland. This means that things which cost 1 króna back then cost 24 krónur now, but 9,600 krónur in Iceland.

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