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Offlineliving_failure
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Rent, home ownership and the future of social classes
    #26367002 - 12/07/19 01:33 PM (6 months, 30 days ago)

I have a high payed job (in my country). Almost 70% higher than the average salary. But i don't earn enough to pay for anything but a rent apartment.
Even worse than that, my mother and father haven't got their own apartment. That means that if the state doesn't give them enough retirement money (we are facing a pension crysis here) i will need to pay my rent and help them with their rents.

My uncle is a drunk with his own apartment. If she rented it she would have almost the same money each month by renting it that i get by working.
My cousin earns the minimum salary here, still, their fathers have a huge house in one of the best streets in the capital of the country. When his parents die he will have ownership over half a house wich is more money than i'll earn in my entire lifetime.



The situation is as bad as, in a few decades, those with a house will have a quality of life those without cannot even dream of. A total different social class just by the decision of their parents a few decades ago.

Under the current political movements, neither far left or far right parties have a solution. And the two parties on the middle actually seek to make it worse.

What is the situation if your country? do any party have a real and practical solution to this issue?


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OfflineJohnRainy
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Re: Rent, home ownership and the future of social classes [Re: living_failure] * 2
    #26367037 - 12/07/19 01:48 PM (6 months, 30 days ago)

Hi.

Yeah man, people are facing that kind of stuff all over. 

Sounds like you've woke up to the struggle. 

This is what progressives are talking about.  We want a society that invests in the people.


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Offlinedreamachine


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Re: Rent, home ownership and the future of social classes [Re: JohnRainy]
    #26367074 - 12/07/19 02:15 PM (6 months, 30 days ago)

Is that just in the cities? Are there no rural areas in your country where land/real estate goes for cheap?


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Offlineliving_failure
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Re: Rent, home ownership and the future of social classes [Re: dreamachine]
    #26367165 - 12/07/19 03:12 PM (6 months, 30 days ago)

Quote:

dreamachine said:
Is that just in the cities? Are there no rural areas in your country where land/real estate goes for cheap?





Yes and no. Those areas are cheaper but there are no jobs around.

For example, now i live in the capital, but i used to live in another city and used to have a similar job (better actually) and bought (with credit) a small house with a nice garden. I left that city and left the work because personal stuff and there is literally no other job for me on that city. I could, of course, change proffesions again, but at my age is a higher risk and in the best case scenario it would be a solution for me (it would not, not coming back to that city ever again) but not for the society, that is my political concern.

Just to make it clear, i have a high paying job, the best at my age for almost all the guys i've met in the last 8 years. Nobody can expect or recommend someone to get a job like mine because there are not enough jobs like mine.
Most people in my old city were and are in the same situation i am now.


Of course in more remote areas the situation is dramatically worse, same taxes, no state hospitals or state sport centers or whatever, lower income, same and sometimes worse everyday prices...


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OfflineMorel Guy
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Re: Rent, home ownership and the future of social classes [Re: living_failure]
    #26367734 - 12/07/19 07:41 PM (6 months, 29 days ago)

Land contract, rent to own.

A lot of people join the military for the benefits.  At least in the states.  Free college, housing loans, medical, all for life.  IF you survive to get out.

Some people rather rent because the only responsibility is to pay rent and utilities.  Owning requires a great deal of work.  You gotta mow, keep a mower functioning, clean gutters, paint and repairs.  Completely responsible if something breaks.  Can't afford a new heater and shit out of luck.


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"in sterquiliniis invenitur in stercore invenitur"

In filth it will be found in dung it will be found


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OfflineLoaded Shaman
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Re: Rent, home ownership and the future of social classes [Re: living_failure]
    #26368231 - 12/08/19 02:18 AM (6 months, 29 days ago)

I was going to ask what state you're in, but I see you're actually in Spain! I'm clueless regarding property there and can only wish you and your family the best, OP :heart::heart::heart:.


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Offlinechibiabos
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Re: Rent, home ownership and the future of social classes [Re: living_failure] * 3
    #26369252 - 12/08/19 03:07 PM (6 months, 29 days ago)

Quote:

living_failure said:
What is the situation if your country? do any party have a real and practical solution to this issue?



We just force people who don't make enough money to afford rent to sleep on the streets and then get upset with them for being dirty street people.


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InvisibleballsalsaM
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Re: Rent, home ownership and the future of social classes [Re: chibiabos] * 3
    #26369279 - 12/08/19 03:18 PM (6 months, 29 days ago)

Yeah, its pretty insane.  As a nation, we spend multiples of what it would cost to house homeless people on incarceration and emergency care, etc.


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OfflineFalcon91Wolvrn03
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Re: Rent, home ownership and the future of social classes [Re: ballsalsa]
    #26369285 - 12/08/19 03:21 PM (6 months, 29 days ago)

:awesomenod:  :whathesaid:


--------------------
I am in a minority on the shroomery, as I frequently defend the opposing side when they have a point about something or when my side make believes something about them.  People here get very confused by that and think it means I prefer the other side.


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InvisibleYangSupporter
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Re: Rent, home ownership and the future of social classes [Re: ballsalsa] * 1
    #26369287 - 12/08/19 03:23 PM (6 months, 29 days ago)

Yep conservatives are penny wise and pound foolish.


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https://youtu.be/cTsEzmFamZ8


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Offlinechibiabos
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Re: Rent, home ownership and the future of social classes [Re: ballsalsa] * 1
    #26369295 - 12/08/19 03:28 PM (6 months, 29 days ago)

Quote:

ballsalsa said:
Yeah, its pretty insane.  As a nation, we spend multiples of what it would cost to house homeless people on incarceration and emergency care, etc.



The incarceration is basically our housing solution, for some of the non-working homeless.  A lot of homeless people in California more or less work full time.  We also have a lot of homeless students who basically just couch surf among their friends.


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Invisiblevault123
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Re: Rent, home ownership and the future of social classes [Re: living_failure]
    #26369914 - 12/08/19 10:27 PM (6 months, 28 days ago)

I blame this on the central bankers and Keynesian economists inflating the prices of everything into oblivion. It has limit though, and we’re long overdue for a recession so just be patient and keep an eye on the market.

You said you got a loan for a house before and have a good job now so I would assume if you’ve been paying your bills on time you should be able to get another loan. If you have good work and credit history banks would be lining up to give you a loan.

Personally I’m a very strong believer in owning realestate and there are a number of helpful benefits to it such as capital appreciation, building equity, and at least in my country a litany of tax benefits.

As always though location is key. Being at your country’s capital I would assume there is long term growth potential which should make it a safer investment. Without being familiar with the area though I couldn’t say for certain. I’m sure the capital of Syria is nice this time of year.

Annual growth in realestate is generally quite predictable. At least until central bankers come along and start up their money printer and then pricing mechanisms become skewed and we end up in a bubble that eventually bursts leaving the economy in a state of flux for a while.


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"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

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OfflineFalcon91Wolvrn03
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Re: Rent, home ownership and the future of social classes [Re: vault123] * 2
    #26369926 - 12/08/19 10:38 PM (6 months, 28 days ago)

Quote:

vault123 said:
I blame this on the central bankers and Keynesian economists inflating the prices of everything into oblivion.

Annual growth in realestate is generally quite predictable. At least until central bankers come along and start up their money printer and then pricing mechanisms become skewed and we end up in a bubble that eventually bursts leaving the economy in a state of flux for a while.



You're confusing central bankers and Keynesian economists with private banks.

It was the private banks that 'inflated prices of everything into oblivion'.  It was also the private banks that created the 'bubble that eventually burst'.

Keynesian economists and the Central Bank prevented a subsequent Great Depression by 'starting up their money printer' after the bubble had already burst.


--------------------
I am in a minority on the shroomery, as I frequently defend the opposing side when they have a point about something or when my side make believes something about them.  People here get very confused by that and think it means I prefer the other side.


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Invisiblevault123
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26369943 - 12/08/19 10:52 PM (6 months, 28 days ago)

That is one version about the Great Depression. Is it time for another rabbit hole?



Since I’ve confused central bankers, Keynesian economists, and private banks, why don’t you clarify where I am mistaken?


--------------------
"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

Judge Aaron Satie


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Invisiblevault123
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26369949 - 12/08/19 10:56 PM (6 months, 28 days ago)

If by prevented a Great Depression you’re referring to the subprime mortgage crisis, they just papered over it. It can’t last forever.

Who has control over the currency supply central bankers or private banks?


--------------------
"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

Judge Aaron Satie


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Invisiblevault123
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26369952 - 12/08/19 10:59 PM (6 months, 28 days ago)

I’m sorry that was the wrong video. That one is disgusting. This is the one I was thinking of.


--------------------
"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

Judge Aaron Satie


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Invisiblevault123
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26369974 - 12/08/19 11:17 PM (6 months, 28 days ago)



--------------------
"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

Judge Aaron Satie


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OfflineFalcon91Wolvrn03
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Re: Rent, home ownership and the future of social classes [Re: vault123] * 1
    #26370010 - 12/08/19 11:59 PM (6 months, 28 days ago)

Quote:

vault123 said:
Since I’ve confused central bankers, Keynesian economists, and private banks, why don’t you clarify where I am mistaken?



Sure.

After Glass Steagall was repealed, private bankers figured out a way to make a shit ton of money in real estate by making loans to anyone and everyone who wanted a loan and not worrying about whether they could be repaid, because the banks were now free to repackage and resell those loans to any schmucks who didn't understand what they were buying.

That caused housing prices to skyrocket, and when people finally started defaulting on their loans, the bubble crashed and the Central Banks put a shit ton of money into the economy to prevent a Great Depression.

Quote:

vault123 said:
If by prevented a Great Depression you’re referring to the subprime mortgage crisis, they just papered over it. It can’t last forever.

Who has control over the currency supply central bankers or private banks?



The Central Bank has control of the money supply, and they're now taking out all the extra money that they put into the economy while the economy is good so we don't see hyperinflation.

Quote:

vault123 said:
I’m sorry that was the wrong video. That one is disgusting. This is the one I was thinking of.




A summary of that video is Keynes says putting money into the economy is a good thing when the economy is hurting, and Hayek's response is that the Government doesn't do a good job of putting it in the right places.

I'll agree with that, but that's a criticism of Government, NOT Keynesian economics.


--------------------
I am in a minority on the shroomery, as I frequently defend the opposing side when they have a point about something or when my side make believes something about them.  People here get very confused by that and think it means I prefer the other side.


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OfflineFalcon91Wolvrn03
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26370022 - 12/09/19 12:06 AM (6 months, 28 days ago)

Quote:

vault123 said:
https://www.theatlantic.com/business/archive/2011/12/hey-barney-frank-the-government-did-cause-the-housing-crisis/249903/

“In the long run we’re all dead” John Maynard Keynes



Oh god, not this nonsense again (I'm criticizing the Atlantic, not you).

Only 6% of subprime loans were CRA.  CRA subprime loans actually defaulted less than other subprime loans.


--------------------
I am in a minority on the shroomery, as I frequently defend the opposing side when they have a point about something or when my side make believes something about them.  People here get very confused by that and think it means I prefer the other side.


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Invisiblevault123
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26370032 - 12/09/19 12:14 AM (6 months, 28 days ago)

Here’s another interpretation of the Great Depression.

http://blog.hillsdale.edu/online-courses/keynesian-economics-and-the-great-depression


--------------------
"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

Judge Aaron Satie


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Invisiblevault123
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26370048 - 12/09/19 12:29 AM (6 months, 28 days ago)

That is a good synopsis there but that had nothing to do with what I was asking about. I was specifically referring to when you said I was confusing “central bankers, Keynesian economists and private banks.” I was asking more of how exactly I was confusing those. That is good you provide a general timeline of events though just to make sure we’re all on the same page.

I meant more defining them. Like central banks are like ECB, the Fed, PBOC, private banks are more like “John and Marys banks down the street” or whatever bank you go to. Keynesian economists just being an economist who subscribes to the Keynesian model of economics which is to print money. So I was referring more to how you claimed that I was confusing them.

I’m going to say that Goldman Sachs and Wells Fargo  and whoever are in league with central banks. More specifically though, how would a private bank inflate a country’s currency? Because you said it was the private banks and not the central Bankers who did it.

I’m just curious how a private bank, which does not control a country’s currency, would be able to inflate that currency. I’m not saying they can’t, and I think they’re in bed together personally, I’m just curious how they do it. Because as far as I understood it it was the central Bankers with their negative interest rate policies and low interest rates and stimulus packages that were inflating the currency supply.


--------------------
"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

Judge Aaron Satie


Edited by vault123 (12/09/19 12:33 AM)


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OfflineJohnRainy
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26370083 - 12/09/19 01:30 AM (6 months, 28 days ago)

Hillsdale College, huh. 

Quote:

What really moved us out of the Depression was a combination of factors that would boost our economy today just as well. They include the increase in international trade, fewer government regulations on the economic system, and lowered corporate and personal income tax rates that were implemented after the war. 




Lower taxes, regulations and a coded call for free trade.  In other words, less democratic influence over the economy and monetary system.

That's the exact opposite of where we need to go.


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OfflineFalcon91Wolvrn03
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26370263 - 12/09/19 06:14 AM (6 months, 28 days ago)

Quote:

vault123 said:
Here’s another interpretation of the Great Depression.

http://blog.hillsdale.edu/online-courses/keynesian-economics-and-the-great-depression



As JohnRainy pointed out, Hillsdale isn't exactly a powerhouse of knowledge.

With that said, your article is correct in that it wouldn't have made any difference to the economy if we spent all the money from WWII on shipping weapons to the Mojave desert only to blow them up there instead of sending them all over the world to fight in war.  But obviously the money was better spent winning a war than blowing things up in the Mojave Desert.  Similarly, it would have been better still to spend the money on things that directly benefit everyone rather than just fighting.  The problem, as I've stated previously, is how Government chooses to spend its money, the problem is NOT Keynesianism.  WWII was a great experiment to prove Keynesianism works.

And preventing a Great Depression after the latest housing crisis proved once again that Keynesianism works, but again the money arguably would have been far better spent on Main St rather than Wall St., and again that's a Government problem, not a Keynesianism problem.

Quote:

vault123 said:
That is a good synopsis there but that had nothing to do with what I was asking about. I was specifically referring to when you said I was confusing “central bankers, Keynesian economists and private banks.” I was asking more of how exactly I was confusing those. That is good you provide a general timeline of events though just to make sure we’re all on the same page.



You confused them by saying you "blame this on the central bankers and Keynesian economists".  They are the ones who fixed the problem, they didn't cause it.  The private banks caused it.

Quote:

vault123 said:
I meant more defining them. Like central banks are like ECB, the Fed, PBOC, private banks are more like “John and Marys banks down the street” or whatever bank you go to.



Exactly correct.

Quote:

vault123 said:
Keynesian economists just being an economist who subscribes to the Keynesian model of economics which is to print money.



No, that's not true at all.  Keynesian economics says to spend more ONLY if the private sector gets us into a huge mess that would lead to a depression (though many US presidents spend more money anyway to make themselves look good creating debt future Presidents don't want).  Again, a problem with Government, not Keynesianism.

Quote:

vault123 said:
It's to spend more during down times and less during up times.



Yes, exactly.

Quote:

vault123 said:
I’m going to say that Goldman Sachs and Wells Fargo  and whoever are in league with central banks.



No, Central Banks are in league with the Government.  Private banks are often leveraged to help implement Central Banking policy, however.

Quote:

vault123 said:
More specifically though, how would a private bank inflate a country’s currency? Because you said it was the private banks and not the central Bankers who did it.



Yes, private banks were responsible for the housing bubble.

Quote:

vault123 said:
I’m just curious how a private bank, which does not control a country’s currency, would be able to inflate that currency. I’m not saying they can’t, and I think they’re in bed together personally, I’m just curious how they do it. Because as far as I understood it it was the central Bankers with their negative interest rate policies and low interest rates and stimulus packages that were inflating the currency supply.



Central Banks keep inflation low (in the US they target about 3% inflation per year).  It's private banks that cause inflation (which the Central Banks have to counter).  As described above, private banks changed lending conditions so that anyone could buy a house, thus creating the housing bubble.


--------------------
I am in a minority on the shroomery, as I frequently defend the opposing side when they have a point about something or when my side make believes something about them.  People here get very confused by that and think it means I prefer the other side.


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Invisiblevault123
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26370471 - 12/09/19 08:56 AM (6 months, 28 days ago)

Do central banks have anything to do with price inflation?


--------------------
"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

Judge Aaron Satie


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Invisiblevault123
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26370474 - 12/09/19 08:59 AM (6 months, 28 days ago)

I don’t want to misrepresent your position here. Is what you’re saying that “private banks make the mess, and central banks clean it up?”


--------------------
"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

Judge Aaron Satie


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Invisiblevault123
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26370512 - 12/09/19 09:19 AM (6 months, 28 days ago)

Did government regulation play any role at all in the subprime mortgage crisis?


--------------------
"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

Judge Aaron Satie


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Offlineqman
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26370538 - 12/09/19 09:30 AM (6 months, 28 days ago)

Quote:

vault123 said:
Did government regulation play any role at all in the subprime mortgage crisis?




In my opinion, the only reasons why the banks engaged in that reckless behavior was because they knew they would get bailed out.  Today, "too big to fail" is essentially a law written into legislation.

https://www.wsj.com/articles/fed-adds-81-4-billion-in-short-term-liquidity-to-markets-11575906103

https://markets.businessinsider.com/news/stocks/fed-repo-operations-explained-what-they-are-and-used-for-2019-9-1028557683

"The Fed has pumped hundreds of billions into the market"

This doesn't even make headline news anymore, the (Elite) government has taken over the markets. The Elite don't even take chances anymore, it's total control today.


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OfflinePsilynut2
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Re: Rent, home ownership and the future of social classes [Re: qman]
    #26370699 - 12/09/19 10:59 AM (6 months, 28 days ago)

If what you are saying is true  then why would killer  real estate  Jews vote for Trump to save their wealth ? Seems like they would do the opposite , isn’t trump fighting the elite on behalf of the working man ?


Quote:

Trump Slammed For Insisting 'Killer' Real Estate Jews Will Back Him To Save Their Wealth





https://www.yahoo.com/huffpost/jews-denounce-iac-wealth-stereotypes-012848412.html


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OfflineFalcon91Wolvrn03
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26370716 - 12/09/19 11:06 AM (6 months, 28 days ago)

Quote:

vault123 said:
Do central banks have anything to do with price inflation?



No, not really.  They have the ability to impact price inflation, but they try to keep it around 3%/year, and they've done a pretty good job of that since the Federal Reserve Reform Act of 1977.

Quote:

vault123 said:
I don’t want to misrepresent your position here. Is what you’re saying that “private banks make the mess, and central banks clean it up?”



Yes.  If you feel differently, you'll need to explain how the Central Banks messed things up, as I explained how private banks messed things up.

Quote:

vault123 said:
Did government regulation play any role at all in the subprime mortgage crisis?



Government deregulation of Glass Steagall played a part.


--------------------
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Re: Rent, home ownership and the future of social classes [Re: Psilynut2]
    #26370722 - 12/09/19 11:12 AM (6 months, 28 days ago)

Quote:

Psilynut2 said:
Isn’t trump fighting the elite on behalf of the working man ?



:rofl2:


--------------------
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26370758 - 12/09/19 11:29 AM (6 months, 28 days ago)

“”They always call the other side ‘the elite’. Why are they elite? I have a much better apartment than they do,”“
  Donald j Trump


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Re: Rent, home ownership and the future of social classes [Re: Psilynut2] * 1
    #26370783 - 12/09/19 11:46 AM (6 months, 28 days ago)

Whoops


--------------------
“I must not fear.
Fear is the mind-killer.
Fear is the little-death that brings total obliteration.
I will face my fear. I will permit it to pass over me and through me.
And when it has gone past I will turn the inner eye to see its path.
Where the fear has gone there will be nothing.
Only I will remain.”


Edited by SirTripAlot (12/09/19 11:47 AM)


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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26370839 - 12/09/19 12:27 PM (6 months, 28 days ago)

Quote:

vault123 said:
Do central banks have anything to do with price inflation?




The interest rate central banks set greatly influences the money supply.  High interest rates=less creation of new "loans', low interest rates is opposite.

The less loans that are being taken out the less money there is in the economy, and that puts upward pressure on its value. 

Opposite is the case in a low interest rate environment.


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Re: Rent, home ownership and the future of social classes [Re: Psilynut2]
    #26370843 - 12/09/19 12:32 PM (6 months, 28 days ago)

Quote:

Psilynut2 said:
If what you are saying is true  then why would killer  real estate  Jews vote for Trump to save their wealth ? Seems like they would do the opposite , isn’t trump fighting the elite on behalf of the working man ?


Quote:

Trump Slammed For Insisting 'Killer' Real Estate Jews Will Back Him To Save Their Wealth





It doesn't matter who the very wealthy vote for, they don't rely on the voting booth to control their destiny. :rofl2:


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Re: Rent, home ownership and the future of social classes [Re: JohnRainy]
    #26370847 - 12/09/19 12:34 PM (6 months, 28 days ago)

Quote:

JohnRainy said:
Quote:

vault123 said:
Do central banks have anything to do with price inflation?




The interest rate central banks set greatly influences the money supply.  High interest rates=less creation of new "loans', low interest rates is opposite.

The less loans that are being taken out the less money there is in the economy, and that puts upward pressure on its value. 

Opposite is the case in a low interest rate environment.




Yet, credit creation in the real economy remains low since the financial crisis in 2008. In "normal" times, lowering rates would stimulate credit growth, that's not longer the case.


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Re: Rent, home ownership and the future of social classes [Re: qman]
    #26370861 - 12/09/19 12:41 PM (6 months, 28 days ago)

Quote:

qman said:
Credit creation in the real economy remains low since the financial crisis in 2008. In "normal" times, lowering rates would stimulate credit growth, that's not longer the case.



Are you sure about that?  All the sources I'm looking at show otherwise.  Can you provide a link?


--------------------
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26370892 - 12/09/19 12:57 PM (6 months, 28 days ago)

We are in uncharted territory. I hope the Keynesian economists with their “modern monetary theory” are right and we've seen the end of recessions and we can just swim lavishly in the wealth bestowed upon us by central bankers who have everything under control. I hope that is the case, but I don’t believe it. The Fed has been around since 1913 and they’ve never been able to predict the market in all that time.

They’ve attempted to stop recessions in the past and have been unsuccessful every single time. Roughly every 7 years we have had a recession in spite of Fed money printing and manipulation. Perhaps this time they’ve figured out how to get the market under control and now they can predict market trends, but historically speaking they have never been able to before. The Fed has not once been able to stop a recession in the past and I would argue they exacerbated the ones that have occurred, and here’s why.

We are in negative interest rates in Europe. Near zero in America with three percent inflation. Which means any money you save in your bank account looses value the longer it is in there. We incentivizing irresponsible behavior and encouraging consumers to spend their money and take out as many loans as possible with cheap credit. Not only is this an unsustainable business model but they (the Fed) is stealing the money right out of your bank account with their 3% inflation target and not giving a penny in interest on the money you save.

Why would anyone be happy about the money they worked and sacrificed for to be worth less every year? We’ve only been off the gold standard since the 1970s. the Fed attempted to normalize interest rates recently and back peddled on it almost immediately. We are in uncharted waters here. By attempting to suppress economic contractions central banks create a much greater entropic disturbance that needs to be equalized. This is causes a bubble. The natural state of markets is that they fluctuate they up they go down, but attempting to just make it go up forever you’re distorting market forces. Those distortions are what cause bubbles.

Value is derived from production. Not from simply pumping a market full of fiat currency. Market forces haven’t been allowed to normalize prices in a very long time. So knowing what something should be worth right now is impossible. I highly doubt a standard size single family home is worth anywhere near the prices they are going for now. In spite of all of the money printing and market manipulation I think the markets will still eventually normalize, but the longer that takes the greater the disturbance will be when it occurs.

That said, I may be wrong. I’ve been wrong before. Like I opened with, I hope they’re right.  Either case, that is an explanation for why housing prices are absolutely insane right now. Most of this philosophy I took from Mike Maloneys hidden secrets of money if anyone is interested in a more detailed explanation. I don’t agree with everything he says but I think a lot of his theories are grounded in sound philosophical principals.


--------------------
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26370916 - 12/09/19 01:12 PM (6 months, 28 days ago)

Quote:

Falcon91Wolvrn03 said:
Quote:

qman said:
Credit creation in the real economy remains low since the financial crisis in 2008. In "normal" times, lowering rates would stimulate credit growth, that's not longer the case.



Are you sure about that?  All the sources I'm looking at show otherwise.  Can you provide a link?




It appears that household, nonfinancial business and financial sector credit growth rates are all down relative to pre-2008 levels.

https://fas.org/sgp/crs/misc/IN10908.pdf


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Re: Rent, home ownership and the future of social classes [Re: vault123] * 1
    #26370935 - 12/09/19 01:24 PM (6 months, 28 days ago)

Quote:

vault123 said:
We are in uncharted territory.



We've been charting this since WWII.  :shrug:

Quote:

vault123 said:
I hope the Keynesian economists with their “modern monetary theory” are right and we've seen the end of recessions and we can just swim lavishly in the wealth bestowed upon us by central bankers who have everything under control. I hope that is the case, but I don’t believe it.



The Fed never claimed it would end recessions (not to my knowledge).  Hopefully we've seen the end of depressions, however.

Quote:

vault123 said:
They’ve attempted to stop recessions in the past and have been unsuccessful every single time. Roughly every 7 years we have had a recession in spite of Fed money printing and manipulation. Perhaps this time they’ve figured out how to get the market under control and now they can predict market trends, but historically speaking they have never been able to before. The Fed has not once been able to stop a recession in the past



Again, they don't try to end recessions, they try to preventing depressions.

Quote:

vault123 said:
I would argue they exacerbated the ones that have occurred, and here’s why.

We are in negative interest rates in Europe. Near zero in America with three percent inflation. Which means any money you save in your bank account looses value the longer it is in there. We incentivizing irresponsible behavior and encouraging consumers to spend their money and take out as many loans as possible with cheap credit. Not only is this an unsustainable business model but they (the Fed) is stealing the money right out of your bank account with their 3% inflation target and not giving a penny in interest on the money you save.  Why would anyone be happy about the money they worked and sacrificed for to be worth less every year?



People have to spend in order to prevent recessions; that's just capitalism.  If you don't want to save money at negative interest rates, put your money elsewhere, like the stock market.  That's what I do.  :shrug:

Quote:

vault123 said:
We’ve only been off the gold standard since the 1970s. the Fed attempted to normalize interest rates recently and back peddled on it almost immediately. We are in uncharted waters here.



Wrong - the Fed doesn't care about interest rates, they care about inflation.  And they've done a good job keeping that under control.

Quote:

vault123 said:
By attempting to suppress economic contractions central banks create a much greater entropic disturbance that needs to be equalized. This is causes a bubble.



No.  They suppress economic contractions to prevent depressions.  They'll ease off well before they create a bubble (though that doesn't prevent the private sector from creating bubbles).

Quote:

vault123 said:
The natural state of markets is that they fluctuate they up they go down, but attempting to just make it go up forever you’re distorting market forces. Those distortions are what cause bubbles.



Again, the Central Bank tries to smooth out the ups and downs, and that's a good thing.  But Presidents and Governments prefer the ups, so they often like to deficit spend when they shouldn't be.  Again, a problem caused by Governments, not Central Banks.

Quote:

vault123 said:
Value is derived from production. Not from simply pumping a market full of fiat currency.  Market forces haven’t been allowed to normalize prices in a very long time. So knowing what something should be worth right now is impossible. I highly doubt a standard size single family home is worth anywhere near the prices they are going for now.



Houses are worth EXACTLY what they're selling for.  That's how supply and demand works.

Quote:

vault123 said:
That is an explanation for why housing prices are absolutely insane right now.



No.  Housing prices are insane right now because people sell their homes for whatever they can get, and people buy homes for what they think they're worth.


--------------------
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Re: Rent, home ownership and the future of social classes [Re: qman]
    #26370957 - 12/09/19 01:35 PM (6 months, 28 days ago)

Quote:

qman said:
It appears that household, nonfinancial business and financial sector credit growth rates are all down relative to pre-2008 levels.

https://fas.org/sgp/crs/misc/IN10908.pdf



That shows credit is, in fact, growing.  Do you think debt should be growing at an even faster rate?


--------------------
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Re: Rent, home ownership and the future of social classes [Re: living_failure]
    #26370965 - 12/09/19 01:39 PM (6 months, 28 days ago)

Quote:

living_failure said:
I have a high payed job (in my country). Almost 70% higher than the average salary. But i don't earn enough to pay for anything but a rent apartment.
Even worse than that, my mother and father haven't got their own apartment. That means that if the state doesn't give them enough retirement money (we are facing a pension crysis here) i will need to pay my rent and help them with their rents.

My uncle is a drunk with his own apartment. If she rented it she would have almost the same money each month by renting it that i get by working.
My cousin earns the minimum salary here, still, their fathers have a huge house in one of the best streets in the capital of the country. When his parents die he will have ownership over half a house wich is more money than i'll earn in my entire lifetime.



The situation is as bad as, in a few decades, those with a house will have a quality of life those without cannot even dream of. A total different social class just by the decision of their parents a few decades ago.

Under the current political movements, neither far left or far right parties have a solution. And the two parties on the middle actually seek to make it worse.

What is the situation if your country? do any party have a real and practical solution to this issue?




Similar in the United States as well, at least in major cities.  You can't buy places in NYC unless you have a million dollars (or enough to put down then expect to pay the bank back forever).

Prices are extremely inflated right now, I would just hold off until things stabilize.  It could take a few years.

For instance a 2 bedroom CONDO with a "backyard" the size of a small patio sells for 650k-800k in the OUTSKIRTS of NYC Queens.  People are banking their "investment" (IE their long time ownership of NYC property which they paid 1/3rd the current asking price just 20-30 years ago) and bailing from the city life.

So long as there is demand, the price will be high.  I look forward to buying far far away for NYC and living like a king with my savings.


--------------------
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26371021 - 12/09/19 02:15 PM (6 months, 28 days ago)

The Fed manipulates interest rates. If they didn’t care about them they wouldn’t do that.


--------------------
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Re: Rent, home ownership and the future of social classes [Re: vault123] * 1
    #26371040 - 12/09/19 02:28 PM (6 months, 28 days ago)

Quote:

vault123 said:
The Fed manipulates interest rates. If they didn’t care about them they wouldn’t do that.



They manipulate interest rates in order to keep inflation under control.


--------------------
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26371094 - 12/09/19 02:59 PM (6 months, 28 days ago)

Quote:

Falcon91Wolvrn03 said:
Quote:

qman said:
It appears that household, nonfinancial business and financial sector credit growth rates are all down relative to pre-2008 levels.

https://fas.org/sgp/crs/misc/IN10908.pdf



That shows credit is, in fact, growing.  Do you think debt should be growing at an even faster rate?




I was just showing that low interest rates no longer produces the growth in credit that happened before the 2008 crisis.

Central banks claim low interest rates are stimulative for the economy, but that's not true at this point. Low rates are great for certain assets prices and that's about it.


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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26371242 - 12/09/19 03:56 PM (6 months, 27 days ago)

Since you agreed with the definitions I used for these terms. How exactly did I confuse them? That was my original question. As far as I can tell I did not confuse them. The last time you tried to answer this you just gave me a run down on the subprime mortgage crisis.


--------------------
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26371282 - 12/09/19 04:12 PM (6 months, 27 days ago)

I’m not saying you have to agree with the conclusions I drew from them, just that I used them correctly given the context.


--------------------
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26371418 - 12/09/19 04:57 PM (6 months, 27 days ago)

Quote:

vault123 said:
Quote:

Falcon91Wolvrn03 said:
Quote:

vault123 said:
I blame this on the central bankers and Keynesian economists inflating the prices of everything into oblivion.



You're confusing central bankers and Keynesian economists with private banks.

It was the private banks that 'inflated prices of everything into oblivion'.  It was also the private banks that created the 'bubble that eventually burst'.



Since you agreed with the definitions I used for these terms. How exactly did I confuse them?



I explained this in my very first reply, which I quoted again here.


--------------------
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26371624 - 12/09/19 06:18 PM (6 months, 27 days ago)

Just because you don’t agree with my conclusion about which entity caused what doesn’t mean I confused them. Central bankers like the Fed “inflate the prices into oblivion” through open market operations and money printing like I said. You don’t have to agree with it, but I know exactly who and what they’re doing that I’m referring to So no, I did not confuse them.


--------------------
"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

Judge Aaron Satie


Edited by vault123 (12/09/19 07:17 PM)


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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26371681 - 12/09/19 06:46 PM (6 months, 27 days ago)

I never said they didn’t have good reasons for doing it. I just said if they “didn’t care” about them that they wouldn’t manipulate them. I said absolutely nothing about their motivations for doing so. I was referring specifically to your claim that they “didn’t care” about them.


--------------------
"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

Judge Aaron Satie


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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26371688 - 12/09/19 06:49 PM (6 months, 27 days ago)

I am sure you know far more about economics than this economics professor does.


--------------------
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26371827 - 12/09/19 08:10 PM (6 months, 27 days ago)



--------------------
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26371921 - 12/09/19 09:28 PM (6 months, 27 days ago)

Quote:

vault123 said:
Just because you don’t agree with my conclusion about which entity caused what doesn’t mean I confused them. Central bankers like the Fed “inflate the prices into oblivion” through open market operations and money printing like I said. You don’t have to agree with it, but I know exactly who and what they’re doing that I’m referring to So no, I did not confuse them.



Can you provide evidence that money printing led to the housing bubble?  That's the first I've heard it.

I already explained how private banks made subprime loans to anyone who wanted one and then resold those loans to people who didn't understand what they were buying.  I thought that was common knowledge.  Do you dispute that?

Quote:

vault123 said:
I never said they didn’t have good reasons for doing it. I just said if they “didn’t care” about them that they wouldn’t manipulate them. I said absolutely nothing about their motivations for doing so. I was referring specifically to your claim that they “didn’t care” about them.



Fine.  When I said "the Fed doesn't care about interest rates", I meant they don't care what the interest rate is, as long is it keeps inflation in check.

Quote:

vault123 said:
I am sure you know far more about economics than this economics professor does.



What makes you think he's an economics professor?  My search showed he has a degree in law, not economics or business.


--------------------
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26372037 - 12/09/19 10:59 PM (6 months, 27 days ago)

What I was originally referring to was why housing prices were so high where OP lives. I wasn’t specifically referring to the sub prime mortgage crisis at that time. Though I was including it, I was more broadly referring to the trends and cycles in all economies more generally.

The sub prime mortgage crisis certainly had its specific culprits but booms and busts are nothing new to economic cycles. Shit there was a great tulip bubble one time so expansions and contractions are nothing new.

So I never took up a point arguing against your explanation of the sub prime mortgage crisis and that wasn’t specifically what I was referring to here, but inflation in general is caused by massive influxes of capital into a system. Like I mentioned earlier true value comes from production.

If you want to grow wealth grow production. Just adding capital without increasing production just causes inflation. I know you’re not gonna agree with that point I was mostly just addressing that in the sentence you claimed I was confused about I wasn’t referring to the specific reasons for the most recent recession.


--------------------
"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

Judge Aaron Satie


Edited by vault123 (12/09/19 11:04 PM)


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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26372049 - 12/09/19 11:22 PM (6 months, 27 days ago)

The entire purpose of the explanation was to say that expanding the money supply is what is driving up housing prices. The point of saying that is to point out of we’ve been in an economic expansion for very long time and are overdue for a contraction.


--------------------
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Edited by vault123 (12/09/19 11:24 PM)


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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03] * 1
    #26372167 - 12/10/19 01:07 AM (6 months, 27 days ago)

Quote:

Falcon91Wolvrn03 said:
They manipulate interest rates in order to keep inflation under control.




This.


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OfflineLachlen
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Re: Rent, home ownership and the future of social classes [Re: living_failure]
    #26372179 - 12/10/19 01:21 AM (6 months, 27 days ago)

When you are young and tough, stop renting and buy some undeveloped land.

Work and develop it for you and your family. Keep it in your family for generations and keep improving it. Invest some money as to keep the land paid for by interest for perpetuity.

When you rent, you are buying your landlord the same kind of land over and over and over again.



People say they can't afford to buy land and wah wah wah.

I have seen it done plenty of times, but by people who do not cry and are pragmatic.

Use your income tax return over 3 years and stop smoking pot.

Then pick a state that has cheap land.

Develop it and live on it. Rent it out too. Farm. Livestock. Burn wood. Propane fridge. Solar.

Fuck the man. Fuck the grid.


Edited by Lachlen (12/10/19 01:22 AM)


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Re: Rent, home ownership and the future of social classes [Re: Lachlen] * 1
    #26372221 - 12/10/19 02:19 AM (6 months, 27 days ago)

Quote:

Lachlen said:
When you are young and tough, stop renting and buy some undeveloped land.

Work and develop it for you and your family. Keep it in your family for generations and keep improving it. Invest some money as to keep the land paid for by interest for perpetuity.

When you rent, you are buying your landlord the same kind of land over and over and over again.



People say they can't afford to buy land and wah wah wah.

I have seen it done plenty of times, but by people who do not cry and are pragmatic.

Use your income tax return over 3 years and stop smoking pot.

Then pick a state that has cheap land.

Develop it and live on it. Rent it out too. Farm. Livestock. Burn wood. Propane fridge. Solar.

Fuck the man. Fuck the grid.




I completely agree with this but you're expecting, way, way, WAY too much from the average person (very easy to do if you're a well-meaning person with the best of intentions).

If someone had the discipline to not joy spend on pot/blowing tax return on stupid shit, they probably wouldn't be in said mess in the first place. It's even less likely they'll discipline themselves out of the hole they're already in. There will always, always be a group of outliers that gets glorified and creates the illusion of "anyone and everyone can and will!", but that's not reality. The reality is that while all of that WILL work for people who apply it, the key word here is APPLY IT, which is exactly what most will NOT do.

Weight loss programs illustrate this perfectly. 9/10 people won't stick with it because the effort required is their actually roadblock; not money, food access, time management, etc. Those things are symptoms of deeper personal issues manifesting as personal economic circumstance. You can change it but changing yourself is usually more work than straight grinding through, so most people give up and do neither.

People, on average, do not push through uncomfortable changes on a consistent enough basis to see any beneficial result.

Extrapolate as you will.


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Re: Rent, home ownership and the future of social classes [Re: Loaded Shaman]
    #26372498 - 12/10/19 07:01 AM (6 months, 27 days ago)

I think most people can do it. The outliers who can't or don't want to will not.

I think the idea itself has different degrees. It could be anywhere from three acres, a well, a wood stove, and electricity poles to 50 acres with a $4,000 dollar Amish cabin with propane and solar.

The point, I think, is not to rent, but to own -- even if a small amount.

I am telling you, when you move onto land, you become "rich." That is, Everything that used to be payed to rent now goes to your bank account. Further, one does not need to be physically fit. One can pay a bulldozer to level 3 fields for several hundred dollars, which comes easily after you live on land while working a full time job... banking money.

Then you start saving hard and rent out a place.

When you have a passive income earner (renter), you can start to think about retirement.

Put some money away into retirement.


Edited by Lachlen (12/10/19 07:04 AM)


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Re: Rent, home ownership and the future of social classes [Re: Lachlen] * 2
    #26372539 - 12/10/19 07:22 AM (6 months, 27 days ago)

You have about 40 post in a day.

I wonder who you really are.


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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26383439 - 12/15/19 02:26 PM (6 months, 22 days ago)

Quote:

vault123 said:
Inflation in general is caused by massive influxes of capital into a system. Like I mentioned earlier true value comes from production.



Sorry for my delayed response, I was banned for the past week.

The Fed targets an inflation rate of ~3% per year.  Yes, that largely due to to an influx of new money into the system, but it is highly controlled.  Everything is supposed to go up by an average of about 3% per year.

The influx of money caused housing prices to go up by about 3% per year, and had nothing to do with the housing bubble.  Housing prices skyrocketed because anyone could suddenly get a loan, and everyone wanted one.  Private banks could do this becasue they could resell their subprime loans to people who didn't understand what they were buying.  The repeal of Glass Steagall was a factor in this.

Quote:

vault123 said:
Just adding capital without increasing production just causes inflation. I know you’re not gonna agree with that point I was mostly just addressing that in the sentence you claimed I was confused about I wasn’t referring to the specific reasons for the most recent recession.



I agree with you, but the Government uses capital to increase production by paying for things such as schools, roads, infrastructure, medicine, etc.

Quote:

vault123 said:
The entire purpose of the explanation was to say that expanding the money supply is what is driving up housing prices.



Only by about 3%, but not more.


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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26383481 - 12/15/19 02:58 PM (6 months, 22 days ago)

You don’t think central bankers setting interest rates to zero, near zero, or negative won’t encourage banks to lend more recklessly in pursuit of profit? Historically low interest rates are historic for a reason. That is why we are in uncharted waters. Negative yielding bonds are absurd. Interest rates can never be normalized again.

The Fed has expanded its balance sheet to the point where it can never be normalized again. The Fed thinks they can keep all of this extra capital from bleeding into the system, but they can’t. It works it’s way into the markets eventually. Then there’s the repo market which the Fed is pumping even more “liquidity” into.

I don’t believe the Fed is being honest about inflation because the metric they use to calculate it keeps changing. https://www.investopedia.com/articles/07/consumerpriceindex.asp

Do you really think the Fed taking us off of the gold standard in 1971 and devaluing the dollar by 98% had no impact on housing prices? http://pricedingold.com/us-dollar/

So let’s say you’re right. Let’s say the Fed has it all under control, (correct me if I’m wrong that’s what I’m hearing) why is it a good thing that we get basically nothing in interest on our savings and the value is eaten away by 3% inflation each year? Why do we want to pay 3% more for the goods and services that we need this year then we paid last year? I see how that policy would help the rich, but anyone who is simply trying to work hard and save money is getting robbed by central bankers, and there is nothing they can do about it but spend their money before it looses even more of its value.

Welcome back btw a week goes by quick. :wink:


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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26383595 - 12/15/19 03:47 PM (6 months, 21 days ago)

Inflation helps the worker more than the rich. At least in theory. If there was no inflation, then you could earn a bunch of money and sit on it and do nothing, while remaining rich. With inflation, money in your mattress doesn't hold value, and needs to be put back in circulation.

Of course, inflation also opens the door for speculation...


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Re: Rent, home ownership and the future of social classes [Re: Kryptos]
    #26383706 - 12/15/19 04:55 PM (6 months, 21 days ago)

Well you also have to consider that the rich spend far less on a percentage basis for daily maintenance expenses such as food and housing than the working class. Do you think a rich person gives a fuck if the price of milk or bread goes up by $0.17 this month? They won’t even notice it. I can tell you who will notice it are the hard working family’s who are barely getting by each week.

There are many family’s who have to make difficult decisions about which brands of food they can afford to eat. What the rich will notice much more than the price of household necessities is the 3% increase in revenue from selling those items that the workers buy.

Then you also have to consider the purchase power of the money both before and after a shiny new influx of cash into the market. Again the rich profit the most from new influxes of cash because they get the first cut. Which means the purchase power is at its highest. After the rich get and spend it into the system it gradually looses its value until it makes it down to the workers who are trying to decide what toys they can afford to buy their children at Christmas.


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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26383785 - 12/15/19 05:41 PM (6 months, 21 days ago)

Yeah, but without inflation, none of that happens to begin with. Someone with control of 50% of the money supply, like the half dozen richest people in the world, continues as such for the foreseeable future. That money simply ceases to exist, effectively.

Which makes it more valuable, from a money for good standpoint.


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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26383915 - 12/15/19 06:48 PM (6 months, 21 days ago)

Quote:

vault123 said:
You don’t think central bankers setting interest rates to zero, near zero, or negative won’t encourage banks to lend more recklessly in pursuit of profit? Historically low interest rates are historic for a reason. That is why we are in uncharted waters. Negative yielding bonds are absurd. Interest rates can never be normalized again.

The Fed has expanded its balance sheet to the point where it can never be normalized again. The Fed thinks they can keep all of this extra capital from bleeding into the system, but they can’t. It works it’s way into the markets eventually. Then there’s the repo market which the Fed is pumping even more “liquidity” into.

I don’t believe the Fed is being honest about inflation because the metric they use to calculate it keeps changing. https://www.investopedia.com/articles/07/consumerpriceindex.asp

Do you really think the Fed taking us off of the gold standard in 1971 and devaluing the dollar by 98% had no impact on housing prices? http://pricedingold.com/us-dollar/

So let’s say you’re right. Let’s say the Fed has it all under control, (correct me if I’m wrong that’s what I’m hearing) why is it a good thing that we get basically nothing in interest on our savings and the value is eaten away by 3% inflation each year? Why do we want to pay 3% more for the goods and services that we need this year then we paid last year? I see how that policy would help the rich, but anyone who is simply trying to work hard and save money is getting robbed by central bankers, and there is nothing they can do about it but spend their money before it looses even more of its value.

Welcome back btw a week goes by quick. :wink:




Interest rates are mainly determined by business inflation (wages and commodities) and not consumer inflation.  If the US working class is experiencing 3% in higher costs of living and wages only grow by 1%, that's called a lower standard of living, not inflation.

BTW, low interest rates don't mean more credit growth, in fact the link I posted showed how much lower credit growth has been since 2008.

Also, central banks around the world expanding their balance sheets has no ramifications at all because that money never enters the real economy. It stays contained in the financial markets. Billionaires don't spend very much money, it just sits there and does nothing.


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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26383971 - 12/15/19 07:25 PM (6 months, 21 days ago)

Quote:

vault123 said:
You don’t think central bankers setting interest rates to zero, near zero, or negative won’t encourage banks to lend more recklessly in pursuit of profit?



I don't see why lower interest rates would encourage banks to make more reckless loans?

Quote:

vault123 said:
Historically low interest rates are historic for a reason. That is why we are in uncharted waters. Negative yielding bonds are absurd. Interest rates can never be normalized again.



Why can't interest rates ever be normalized again?  If more money gets into the hands of more people, then there is more spending and more growth, pushing inflation up, which also pushes interest up.

Quote:

vault123 said:
The Fed has expanded its balance sheet to the point where it can never be normalized again. The Fed thinks they can keep all of this extra capital from bleeding into the system, but they can’t. It works it’s way into the markets eventually.



Why can't the Fed's balance sheet ever be normalized again?  The Fed pumped a ton of extra money into the economy (to prevent a 2nd Great Depression) by buying up Government securities, and now they can slowly sell those securities and take the money back out.

Quote:

vault123 said:
Then there’s the repo market which the Fed is pumping even more “liquidity” into.



The Fed has a lot of tools at its disposal.  Why do you think this is a problem?

Quote:

vault123 said:
I don’t believe the Fed is being honest about inflation because the metric they use to calculate it keeps changing. https://www.investopedia.com/articles/07/consumerpriceindex.asp



I agree, there is a lot of debate on how to best measure inflation.  Each has its pros and cons.

Quote:

vault123 said:
Do you really think the Fed taking us off of the gold standard in 1971 and devaluing the dollar by 98% had no impact on housing prices? http://pricedingold.com/us-dollar/



As I said before, I think it led to prices rising by ~3% per year.

Quote:

vault123 said:
So let’s say you’re right. Let’s say the Fed has it all under control, (correct me if I’m wrong that’s what I’m hearing) why is it a good thing that we get basically nothing in interest on our savings and the value is eaten away by 3% inflation each year? Why do we want to pay 3% more for the goods and services that we need this year then we paid last year? I see how that policy would help the rich, but anyone who is simply trying to work hard and save money is getting robbed by central bankers, and there is nothing they can do about it but spend their money before it looses even more of its value.



First of all, the Fed is trying it's best to satisfy out of control Government spending (deficit spending absolutely needs to be cut, but that's a Government problem and not a Fed problem).  People's incomes are historically going up at least on par with the cost of living, so inflation isn't really hurting anyone.  Of course, if you invest your money below the rate of inflation, you'll lose out, but there many different ways to invest, such as stocks, real estate, commodities, etc.

As I said before, I think our problems are caused by the Government, not the Fed.


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Re: Rent, home ownership and the future of social classes [Re: qman]
    #26383987 - 12/15/19 07:33 PM (6 months, 21 days ago)

Quote:

qman said:
Low interest rates don't mean more credit growth, in fact the link I posted showed how much lower credit growth has been since 2008.



Lower interest rates definitely means more credit growth than higher interest rates though.  And your chart showed credit is still growing, albeit not as fast as it used to.

Quote:

qman said:
Also, central banks around the world expanding their balance sheets has no ramifications at all because that money never enters the real economy. It stays contained in the financial markets. Billionaires don't spend very much money, it just sits there and does nothing.



That's a Government problem, not a Central Bank problem.  Governments should put more bailout money into Main Street and not Wall Street.


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Re: Rent, home ownership and the future of social classes [Re: living_failure]
    #26384033 - 12/15/19 07:52 PM (6 months, 21 days ago)

I'd be interested to see what sort of figures you're working with to not be able to afford anything. I know exact figures might be a bit personal, but a general overview of the situation in Madrid would be cool.

For example in Adelaide where I live you can buy a crappy 3 bedroom house in a low/middle income suburb for $200,000-$250,000. That's sort of the bottom end (but still decent) of the market. The median house price 10-20km from the CBD is ~$500,000.

The median income here is $57,000 pa. so anyone that says it's not affordable to buy a house in Adelaide would be full of shit, and only looking in the fancy burbs.

Just curious how the figures compare to Madrid?


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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26384224 - 12/15/19 10:05 PM (6 months, 21 days ago)

I agree with most of this. There are a few issues I think we could argue over but nothing that I’m concerned enough about to bring up tonight. My main issue is that you seem to be making a distinction between the government and the Fed.

I know technically they are supposed to be separate, but for all intents and purposes are they really? You don’t think the Fed wouldn’t step in at any point if the government had an issue?


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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26384243 - 12/15/19 10:22 PM (6 months, 21 days ago)

I agree with you that the Fed and Govt are essentially the same.  The Fed is even accountable to Congress.  If Congress tells the Fed "We'd like to borrow $1 trillion this year", the Fed has no choice but to make it happen.  The Fed can't tell the Government to stop with the out of control deficit spending.


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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03] * 1
    #26384348 - 12/16/19 12:22 AM (6 months, 21 days ago)

I have issues with the FED, but they make decisions our politicians could not handle.


--------------------
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Where the fear has gone there will be nothing.
Only I will remain.”


Edited by SirTripAlot (12/16/19 12:22 AM)


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Re: Rent, home ownership and the future of social classes [Re: Lachlen] * 1
    #26386334 - 12/17/19 02:09 AM (6 months, 20 days ago)

Quote:

Lachlen said:
I think most people can do it. The outliers who can't or don't want to will not.

I think the idea itself has different degrees. It could be anywhere from three acres, a well, a wood stove, and electricity poles to 50 acres with a $4,000 dollar Amish cabin with propane and solar.

The point, I think, is not to rent, but to own -- even if a small amount.

I am telling you, when you move onto land, you become "rich." That is, Everything that used to be payed to rent now goes to your bank account. Further, one does not need to be physically fit. One can pay a bulldozer to level 3 fields for several hundred dollars, which comes easily after you live on land while working a full time job... banking money.

Then you start saving hard and rent out a place.

When you have a passive income earner (renter), you can start to think about retirement.

Put some money away into retirement.




Oh I'm not arguing the validity of your plan at all, brother. You could do it. I could do it. I'd bet more money, for both of us to invest in our plan, that 80%+ of people WON'T do it even if they have the ability to, lol. That's what I'm saying. People are usually so self-defeatingly cynical and negative they're their own worst enemy, more so than anything in the external world could ever be.

Refer to the last quote in my sig! :cool:


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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26386336 - 12/17/19 02:10 AM (6 months, 20 days ago)

Quote:

Falcon91Wolvrn03 said:
I agree with you that the Fed and Govt are essentially the same.  The Fed is even accountable to Congress.  If Congress tells the Fed "We'd like to borrow $1 trillion this year", the Fed has no choice but to make it happen.  The Fed can't tell the Government to stop with the out of control deficit spending.




But it CAN continue to loan bonds to the government regardless of deficit and spending issues, correct (I'm willing to be wrong hence me asking)?


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Re: Rent, home ownership and the future of social classes [Re: Loaded Shaman]
    #26386518 - 12/17/19 06:53 AM (6 months, 20 days ago)

That was XUL that you were talking to two posts back.


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Re: Rent, home ownership and the future of social classes [Re: Loaded Shaman]
    #26386754 - 12/17/19 09:53 AM (6 months, 20 days ago)

Quote:

Loaded Shaman said:
Quote:

Falcon91Wolvrn03 said:
The Fed is even accountable to Congress.  If Congress tells the Fed "We'd like to borrow $1 trillion this year", the Fed has no choice but to make it happen.  The Fed can't tell the Government to stop with the out of control deficit spending.



But it CAN continue to loan bonds to the government regardless of deficit and spending issues, correct (I'm willing to be wrong hence me asking)?



No, they wouldn't issue new securities to raise money for the Federal Government if the Government didn't need it.  They might sell the securities they recently bought to stimulate the economy to get money out of the system to keep the total money supply under control.  And it appears they've been doing just that for the past year:



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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26386781 - 12/17/19 10:08 AM (6 months, 20 days ago)



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Re: Rent, home ownership and the future of social classes [Re: qman]
    #26386870 - 12/17/19 11:07 AM (6 months, 20 days ago)

Yes, the Fed adjusts the money supply as required to keep things stable.  Should I be worried that it's the highest since December, but lower than the five year period before that?


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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26386944 - 12/17/19 12:11 PM (6 months, 20 days ago)

Quote:

Falcon91Wolvrn03 said:
Yes, the Fed adjusts the money supply as required to keep things stable.  Should I be worried that it's the highest since December, but lower than the five year period before that?




I don't see any worry about it. QE goes into the financial markets and stays there, we have 12 years of evidence to show it.


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Re: Rent, home ownership and the future of social classes [Re: qman] * 1
    #26387076 - 12/17/19 01:22 PM (6 months, 20 days ago)

It goes up and down.  Better for the Fed to have assets on their balance sheet than to be in a 2nd Great Depression  :shrug:


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I am in a minority on the shroomery, as I frequently defend the opposing side when they have a point about something or when my side make believes something about them.  People here get very confused by that and think it means I prefer the other side.


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OfflineLoaded Shaman
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03] * 1
    #26389942 - 12/19/19 02:17 AM (6 months, 18 days ago)

Quote:

Falcon91Wolvrn03 said:
Quote:

Loaded Shaman said:
Quote:

Falcon91Wolvrn03 said:
The Fed is even accountable to Congress.  If Congress tells the Fed "We'd like to borrow $1 trillion this year", the Fed has no choice but to make it happen.  The Fed can't tell the Government to stop with the out of control deficit spending.



But it CAN continue to loan bonds to the government regardless of deficit and spending issues, correct (I'm willing to be wrong hence me asking)?



No, they wouldn't issue new securities to raise money for the Federal Government if the Government didn't need it.  They might sell the securities they recently bought to stimulate the economy to get money out of the system to keep the total money supply under control.  And it appears they've been doing just that for the past year:






Ah, this makes sense, and I think I knew this, but it was obscured by all the other data in my brain :cool:. Thank you, Falcon :thumbup:


Quote:

Falcon91Wolvrn03 said:
It goes up and down.  Better for the Fed to have assets on their balance sheet than to be in a 2nd Great Depression  :shrug:




Isn't that the truth.


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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26390485 - 12/19/19 10:58 AM (6 months, 18 days ago)

Quote:

Falcon91Wolvrn03 said:
It goes up and down.  Better for the Fed to have assets on their balance sheet than to be in a 2nd Great Depression  :shrug:




That's great and everything, but that tactic has only increased the wealth and income inequality. The rationalization to bailout the very rich is in the best interest of the bottom 99% is getting old. The top 1% shouldn't hold the bottom 99% hostage with asset prices, but that's exactly what you're endorsing. The bottom 99% shouldn't be intimated by their scare tactics.

Shouldn't the Fed buy some debt off the peasants and give them some form of bailout to stimulate the real economy and reverse the inequality?


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OfflineFalcon91Wolvrn03
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Re: Rent, home ownership and the future of social classes [Re: qman]
    #26390497 - 12/19/19 11:06 AM (6 months, 18 days ago)

Quote:

qman said:
That's great and everything, but that tactic has only increased the wealth and income inequality. The rationalization to bailout the very rich is in the best interest of the bottom 99% is getting old. The top 1% shouldn't hold the bottom 99% hostage with asset prices, but that's exactly what you're endorsing. The bottom 99% shouldn't be intimated by their scare tactics.

Shouldn't the Fed buy some debt off the peasants and give them some form of bailout to stimulate the real economy and reverse the inequality?



Absolutely.  :thumbup:

I'll say again, the Government should have helped Main St, not Wall St.  That's a problem with our Government, not the Fed.


--------------------
I am in a minority on the shroomery, as I frequently defend the opposing side when they have a point about something or when my side make believes something about them.  People here get very confused by that and think it means I prefer the other side.


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