Economic Realities

It’s really frustrating to have to listen to people talk about economics these days. The amount of people without the slightest clue to anything are far too numerous to offer any hope. Especially since the information behind it all isn’t rare or mysterious, it just takes a little thought.

Pay attention people because your grade depends on it. The economic crash was caused by poor business practices. The banks and financial institutions in this country are responsible for what went wrong because they were loose with the purse strings and actively lent money to people who they shouldn’t have, this includes both rich and poor people. But they did this because the government not only let them, but told them to.

The government sees that people who own homes are better citizens. Less criminals, higher net-worth, and most importantly pay more in taxes. The government decides therefore it would be good to have more people become homeowners and deregulates the financial industry and encourages them to be fast and loose with the bucks to get more people into homes. This is both why the prices rose so quickly, and why we had a crash. So yes you socialist progressive pricks, businesses did cause the crash, BECAUSE THE GOVERNMENT LET THEM!

First think about this, if everyone owning a home is good, than everyone owning a mansion is better. Trailers and apartments aren’t worth as much so let’s build a mansion for everyone and that will create a lot of wealth. No. Why no? Because…

Home ownership is not a creator of wealth, it is a sign of wealth. When you have money(or at least a job that offers the career potential of that money, thus mortgages) you can buy a house. However buying a house without that money(or potential) leads to……not a thing. However with our highly tuned intellect, many people figured out they could sell their house any time they needed that wealth that they didn’t possess. They could buy a house they couldn’t afford, sell it, and walk away with more money than they started. Except things aren’t that easy and oh yeah, there’s that bubble thing we created that just had to burst. So now everybody’s got a house they can’t afford and nobody else can afford to buy it either.

The key here is that houses(and anything else for that matter) are a sign of wealth, an indicator of wealth, NOT a creator of wealth. The only person who creates wealth out of a house is the developer, construction team, and realtor. That’s it, nobody else actually gets money out of the house.

A Crown does not make a King. When a Kingdom needs a King, they do not assemble all the people in the land who have a crown and pick someone. They pick whoever is the rightful heir to the throne and holder of the Kings title. Having a crown does not make him the King, being the King makes him the King and it is the same with wealth. Having a home does not make you wealthy, being wealthy gets you a home. *I use the term wealthy not on a scale of Donald Trump, but as the wealth that any person has.*

To own a home(or anything), you must have the money for it. People buy homes not because they want wealth, but because they already have it. If it was that simple there is no reason for any person in America to be poor.

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About Moose

I am who I am

Posted on April 3, 2013, in No Hope For America, Problems to Ponder, The Life of Man and tagged , , , , , , , , , . Bookmark the permalink. 3 Comments.

  1. That pretty much sums it up. Well said.

  2. cogitansiuvenis

    “The only person who creates wealth out of a house is the developer, construction team, and realtor. ”

    Exactly. I’ve worked in commercial RE in one way or another, and even in college was interested in it. The one thing I could never stress enough is tha it isn’t the property itself that has value, it’s the prospective cashflow. When developers purchase land the first thing they do is they divide it up, either by building multiple homes, an apartment, or an office space. The money they make is by based on how many tenants they can cram into a space depending on the going market rental rates. I have seen prospective projects go belly up because the developer couldn’t get permission to add an additional floor or two for an apartment or officer tower because the project wouldn’t have been profitable otherwise.

    Your home isn’t an asset, at best it’s a savings device since the long term 100 year return is just .4% above the inflation rate, and at worst a giant money sink.

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