No One Wants to Talk About Printing Money… Except When They Do

“It’s going to be an interesting day,” said the American Action Forum’s Douglas Holtz-Eakin, “when you open The Wall Street Journal and you see your picture opposite Ben Bernanke’s, and you’ve picked a fight with the Fed.” 

That might explain the number of uncomfortable silences at today’s conference on Capital Markets in Real Estate, hosted by N.Y.U.’s Schack Institute of Real Estate at the Waldorf Astoria. No one wants to get in a fight with Ben Bernanke. Except when they do. 

“I don’t think it’s an attack on the foundations of Western civilization,” said Mr. Holtz-Eakin, who was the speaker for the morning’s fourth session, and at least the third in which printing more money came up. “But I think it’s a very, very bad idea.” 

It can’t be the bagels (cold) or the tours of the hotel (charming) that drew a (mostly male) crowd of  industry heavyweights and N.Y.U. grad students out at 8 this Thursday morning. It must be a palpable fear that the shake-up in capital markets isn’t over.

Some believe it’s only just begun.  

Inflation is generally good for the real estate business, Mr. Holtz-Eakin conceded. But economic instability, of course, is not. He expects at least a couple of years of volatility while everyone tries to figure out the structure of returns on investments.

Otherwise, Mr. Holtz-Eakin barely mentioned real estate, much like the event’s keynote speaker, Michelle Caruso-Cabrera, a CNBC anchor who’s just come out with a book, You Know I’m Right: More Prosperity, Less Government. But the dire economic future both speakers anticipate in the next couple of years, if indeed it comes true, will no doubt affect the property market’s nascent recovery. 

Ms. Caruso-Cabrera said quantitative easing is one of the most important economic issues of the moment, but she declined to tell The Observer whether she thinks it’s a good idea. She did offer this real estate-related tidbit, courtesy of her speaker’s notes (paraphrased):

Following the French Revolution, the new republican government printed money whose value was tied to church land they’d acquired. But they kept discovering that the land was worth more, so they kept printing more money and devaluing the existing currency. In seven years, the price of a bushel of flour went from 40 cents to $40.

Let the Fed eat cake!

The journalist emphasized she wasn’t saying that printing money is bad–or, god forbid, will cause a revolution–but just that it has important consequences. 

The Fed did have one defender on the mid-morning Private Equity Panel–which mostly tried to steer clear of politics and talk about all the bargain investment opportunities in places like New York and Washington, as well as more recently in California, that are going, going … almost gone.

Neil Bluhm, of Walton Street Capital, said the controversy has been “blown out of proportion.” He added: “I’ve been beat up by a lot of friends because I supported Obama. But he saved this country from going into the greatest depression of all time.” 

No One Wants to Talk About Printing Money… Except When They Do