Turning points in a financial system usually occur in discrete phases. At first, new information that contradicts existing preconceptions is dismissed as unimportant. But as more such data accumulates, a growing number of people come to expect the new trend to continue. In economist-speak, “expectations” change, and these become self-fulfilling prophecies, leading people to behave in ways that anticipate — and thus cause — more of the same.

Early on, new information that contradicts existing preconceptions is dismissed as unimportant. But as more such data points accumulate, a growing number of people come to expect the new trend to continue. In economist-speak, “expectations” change, and these become self-fulfilling prophecies, as people behave in ways that anticipate — and thus cause — more of the same.

Inflation is a classic example. When the cost of most things has been flat for a long time, a few scattered price increases don’t change any minds. But when lots of things start costing more, everyone eventually decides that prices are rising generally and begin buying in anticipation, whatever the current price, which in turn causes prices to rise even faster.

This kind of data-driven perceptual shift is now occurring in a lot of different places.

In US housing, Reuters just conducted a poll of property market analysts to see what they think home prices will do in coming years. Turns out – not really surprising given the recent surge back to 2006 bubble levels – that they expect home prices to outpace both overall inflation and wage growth for at least the next few years.

U.S. house prices to rise at twice the speed of inflation and pay: Reuters poll

http://news.goldseek.com/DollarCollapse/1528375817.php