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The FED implicitly transferred trillions from poorer renters and young people to wealthy older homeowners.
by testval123 2y ago
The FED implicitly transferred trillions from poorer renters and young people to wealthy older homeowners.
- triceratops 2y agoYou're right, but it's "Fed", not "FED". It isn't an acronym.
- smallmancontrov 2y agoYep. It was a real slap in the face.
- bryanlarsen 2y agoWhy blame the Fed? The low interest rates that made it easy to buy homes (driving up the price) also should have made it cheap to build homes which would have driven down the price. It was local regulations that prevented building homes.
- testval123 2y agoIt takes years to plan, get permits / financing, and build homes. It takes days/weeks to submit a bid or refinance a house.
- dangles 2y agoIt takes under 8 months to get permits and build homes end-to-end in parts of the US. It taking years is a local problem. As long as demand runs much higher than supply, prices will keep growing.
- Der_Einzige 2y agoUsually places with no regulation look a lot like Houston TX. Do you know the situation depicted from the movie "Up" where there's a house surrounded by parking lots of malls and stuff? That's what low regulation building gets you. I'm not talking about NIMBYs, I'm talking about lax zoning laws.
- enlyth 2y agoAmong other things, I think interest only mortgages are a completely degenerate financial product that shouldn't exist, the only purpose is so someone can leverage themselves to the tits on housing
- smallmancontrov 2y agoYeah but it pumps the value of my house so fuck 'em. (I don't believe this, but I do believe it is the most common unstated thought on the subject so I feel compelled to get it on record.)
- JumpCrisscross 2y ago> interest only mortgages are a completely degenerate financial product that shouldn't exist Like, at all? Or for individuals? Maybe only for poor individuals?
- smallmancontrov 2y agoIncreasing available leverage provides an immediate windfall to asset-holders. This is why our economy errs so heavily on the side of encouraging too much leverage: the world is run by asset-holders, for asset-holders. The most obscene part of this is when asset-holders try to blame the problem on their victims (the people who must pay higher prices for the pumped assets). The leverage is not generosity, it is a curse.
- JumpCrisscross 2y ago> when asset-holders try to blame the problem on their victims (the people who must pay higher prices for the pumped assets) How are the latter, those procuring assets, not also asset holders?
- smallmancontrov 2y agoThey become asset holders on worse terms. Now they must maintain their predecessor's degeneracy to simply not lose money. If they want to gain money, they must figure out how to impose even more degenerate terms on those beneath them. Ratchet goes click. Eventually it implodes. People who got in early on the ponzi walk away with windfalls but the last generation is the largest generation and it gets to hold the bags.
- riku_iki 2y ago> The low interest rates should have made it cheap to build homes not sure I understand how you came to such conclusion..
- bryanlarsen 2y agoBuilding homes is a capital intense business.
- triceratops 2y ago> It was local regulations that prevented building homes. Wealthy old homeowners tend to control those.
- ProfessorLayton 2y agoOnly because the younger renters aren't as involved in local politics as the older homeowners. SF, for example, is mostly renters and they could easily overturn NIMBY homeowners to make housing cheap and plentiful. Alas, they don't turn out and push politicians the way homeowners do, so here we are.
- Workaccount2 2y agoIronically the biggest reason the fed did this was to keep those poorer renters employed.