4 ms·

Well yes, this is obvious. Nobody today is buying ranch houses in Palo Alto for $160,000 anymore.

by notadoc 10y ago

turnip1979 10y ago
My hypothesis is that people without significant real assets are all worse off since the money supply has been debased. Peter Thiel's book talks about "secrets" that are not really hidden but overlooked .. if he were to interview me and ask what I thought was an apparent secret, I'd say it was this. I'm not even sure what one can do if one accepts this .. borrow money and hoard real assets? If you don't have money to begin with, how do you get the loans? So yeah .. defn worse off.
- justinlardinois 10y ago
  I'm curious about what you're saying, but I'm a little confused by your terminology. Are you using "debased" here to refer to inflation? And could you elaborate on Thiel's definition of "secrets" and what exactly the "secret" here is?
- dragonwriter 10y ago
  > My hypothesis is that people without significant real assets are all worse off since the money supply has been debased. "Debased" in this context doesn't make any sense; it really only makes sense in commodity or representational currencies, not fiat money. If you mean "devalued", then you really should say that. But I'm not sure how the logic works, anyway, unless you assume that those without "real" assets also tend to have a constant and positive wealth of fiat currency, such that decline in fiat currency value has the same effect on their net wealth. I really think there is, at most, a coincidence or possibly common cause here rather than the causal link you suggeset, which I don't see any clear rationale or evidence for.
- deleted 10y ago
  [deleted]
- Spooky23 10y ago
  Whenever you have inflation, it's always good to have assets, either real property (they're not making more land) or durable goods.
- toodlebunions 10y ago
  The Federal Reserve would agree with part of your thesis, as zero interest rates and quantitative easing has caused significant asset inflation and those who are not asset holders have not benefited at all. Instead, many are now priced out of real estate, and have to pay high P/E valuations for stocks. Much higher risk to participate now.
- fspear 10y ago
  So what are the viable options for those of us without significant assets? This is a real issue for me at this stage as even though I am a relatively high income earner I have been completely priced out of the real estate market. Rent takes up most of my salary making saving up for a decent deposit really dificult (I live in Australia).
  - notadoc 10y ago
    The argument I have often heard is that access to credit can be an equalizer. Obviously using credit is high risk at these asset price levels though, but a mortgage is how most average people get to participate in asset inflation.
  - gohrt 10y ago
    Options from HN: Go to a coding bootcamp, accrue significant assets.
  - antisthenes 10y ago
    Revolution?
zip1234 10y ago
Also, the size of new homes has risen from 1600 in 1973 to 2600 today. It's not like all factors remain the same. You can drive through old neighborhoods near me with 1000 sq ft houses that sell for $40k because nobody wants a house that small. I'll bet a lot of the homes being built in Palo Alto right now are not small.
- khuey 10y ago
  There are very very few homes being built in Palo Alto right now.
- devonkim 10y ago
  Elizabeth Warren addresses this trend in a paper showing most homes' square footage went up to add a second bathroom in comparison to the middle of the century. The cost of labor to add a bathroom and the raw cost of the materials in relation to that low cost house is probably also not worth it either because if we're talking $40k houses I would heavily bet that the property is in an area with no non-minimum wage jobs within reasonable commute distance nor retirees that need income.
- notadoc 10y ago
  A 1200sq ft 3 bed 1 bath ranch in Palo Alto today costs about $1.8 million, they're all over zillow and sell quick too.
- 0xcde4c3db 10y ago
  > You can drive through old neighborhoods near me with 1000 sq ft houses that sell for $40k because nobody wants a house that small. How closely have you looked at those $40K houses? I've seen a handful of sub-$100K smaller houses listed in my region, but they're wrecks; they'd need a massive amount of work to get anywhere near the comfort and safety level of a modern, well-maintained house. They're basically the house equivalent of buying a $500 car.
- maxsilver 10y ago
  > You can drive through old neighborhoods near me with 1000 sq ft houses that sell for $40k because nobody wants a house that small. Sure, but a $40k house will need anywhere from $90k to $160k worth of additional repairs to be safe to inhabit. And since that cost isn't in the equity, most people in most areas can't qualify to finance that. (A $200k mortgage is not identical to a $40k mortgage and $160k reno loan).

Well yes, this is obvious. Nobody today is buying ranch houses in Palo Alto for $160,000 anymore.

by notadoc 10y ago

Well yes, this is obvious. Nobody today is buying ranch houses in Palo Alto for $160,000 anymore.

turnip1979 10y ago

My hypothesis is that people without significant real assets are all worse off since the money supply has been debased. Peter Thiel's book talks about "secrets" that are not really hidden but overlooked .. if he were to interview me and ask what I thought was an apparent secret, I'd say it was this. I'm not even sure what one can do if one accepts this .. borrow money and hoard real assets? If you don't have money to begin with, how do you get the loans? So yeah .. defn worse off.

justinlardinois 10y ago
I'm curious about what you're saying, but I'm a little confused by your terminology. Are you using "debased" here to refer to inflation? And could you elaborate on Thiel's definition of "secrets" and what exactly the "secret" here is?
dragonwriter 10y ago
> My hypothesis is that people without significant real assets are all worse off since the money supply has been debased. "Debased" in this context doesn't make any sense; it really only makes sense in commodity or representational currencies, not fiat money. If you mean "devalued", then you really should say that. But I'm not sure how the logic works, anyway, unless you assume that those without "real" assets also tend to have a constant and positive wealth of fiat currency, such that decline in fiat currency value has the same effect on their net wealth. I really think there is, at most, a coincidence or possibly common cause here rather than the causal link you suggeset, which I don't see any clear rationale or evidence for.
deleted 10y ago
[deleted]
Spooky23 10y ago
Whenever you have inflation, it's always good to have assets, either real property (they're not making more land) or durable goods.
toodlebunions 10y ago
The Federal Reserve would agree with part of your thesis, as zero interest rates and quantitative easing has caused significant asset inflation and those who are not asset holders have not benefited at all. Instead, many are now priced out of real estate, and have to pay high P/E valuations for stocks. Much higher risk to participate now.
fspear 10y ago
So what are the viable options for those of us without significant assets? This is a real issue for me at this stage as even though I am a relatively high income earner I have been completely priced out of the real estate market. Rent takes up most of my salary making saving up for a decent deposit really dificult (I live in Australia).
- notadoc 10y ago
  The argument I have often heard is that access to credit can be an equalizer. Obviously using credit is high risk at these asset price levels though, but a mortgage is how most average people get to participate in asset inflation.
- gohrt 10y ago
  Options from HN: Go to a coding bootcamp, accrue significant assets.
- antisthenes 10y ago
  Revolution?

zip1234 10y ago

Also, the size of new homes has risen from 1600 in 1973 to 2600 today. It's not like all factors remain the same. You can drive through old neighborhoods near me with 1000 sq ft houses that sell for $40k because nobody wants a house that small. I'll bet a lot of the homes being built in Palo Alto right now are not small.

khuey 10y ago
There are very very few homes being built in Palo Alto right now.
devonkim 10y ago
Elizabeth Warren addresses this trend in a paper showing most homes' square footage went up to add a second bathroom in comparison to the middle of the century. The cost of labor to add a bathroom and the raw cost of the materials in relation to that low cost house is probably also not worth it either because if we're talking $40k houses I would heavily bet that the property is in an area with no non-minimum wage jobs within reasonable commute distance nor retirees that need income.
notadoc 10y ago
A 1200sq ft 3 bed 1 bath ranch in Palo Alto today costs about $1.8 million, they're all over zillow and sell quick too.
0xcde4c3db 10y ago
> You can drive through old neighborhoods near me with 1000 sq ft houses that sell for $40k because nobody wants a house that small. How closely have you looked at those $40K houses? I've seen a handful of sub-$100K smaller houses listed in my region, but they're wrecks; they'd need a massive amount of work to get anywhere near the comfort and safety level of a modern, well-maintained house. They're basically the house equivalent of buying a $500 car.
maxsilver 10y ago
> You can drive through old neighborhoods near me with 1000 sq ft houses that sell for $40k because nobody wants a house that small. Sure, but a $40k house will need anywhere from $90k to $160k worth of additional repairs to be safe to inhabit. And since that cost isn't in the equity, most people in most areas can't qualify to finance that. (A $200k mortgage is not identical to a $40k mortgage and $160k reno loan).