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>Part of being a free market We are talking about the United States, not a free market. In the United States, the stated policy of the central bank (hint: fre

>Part of being a free market We are talking about the United States, not a free market. In the United States, the stated policy of the central bank (hint: free markets have no central banks that control interest rates and pick winners and losers) for the last 8 years is to inflate housing prices. The FED and the big banks still have trillions of dollars of worthless derivatives on their books that they have not "marked to market" because they are derived from mortgages on homes that are underwater. The FED has taken over 5 trillion dollars onto its balance sheet in the last 8 years in order to artificially inflate housing prices (not including off-balance sheet loans, guarantees, and other tangible efforts taken to prop up banks and home prices). This is the opposite in a free market. In a free market, housing prices would plummet with demand and credit availability, and would reach an equilibrium with income. This is impossible in our centrally controlled economy that runs on debt service in which even a small bump in interest rates or a small drop in assets prices will cause the whole scheme to fall apart. Edit: The Downvotes without replies are somewhat amusing. I can't decide if its out of ignorance of the financial system on the part of those who read the hacker news, or cognitive dissonance. I suspect a mix of both. I welcome anyone who thinks any of the above is inaccurate to chime in.

sremani 10y ago
That is quite a good way of putting things in perspective about Fed and free money building up the asset bubble, which is only made worse by stricter zoning laws and NIMBY. As far as downvotes go, HN leans left, that is not news, any conservative or libertarian views will collect the usual down votes. Strangely it happens in bunches too.
- StanislavPetrov 10y ago
  It isn't a left or right issue, its a reality issue. We in the USA do not have a free market, where prices are determined by market forces. Whether or not this is a good or bad thing is a completely different debate. The FED does not hide the fact that it buys MBS (mortgage backed securities) to prop up the housing market. This is the opposite of a free market (and only one of many ways the market is controlled). This isn't up for debate among members of the reality-based community. https://www.newyorkfed.org/markets/ambs/ambs_faq.html https://www.newyorkfed.org/markets/ambs/ambs_faq.html >The Federal Open Market Committee (FOMC) directed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York to purchase additional MBS and longer-term Treasury securities (see http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm http://www.federalreserve.gov/monetarypolicy/fomccalendars.h... for the most recent FOMC statement). The FOMC also directed the Desk to maintain its existing policies of reinvesting principal payments from the Federal Reserve’s holdings of agency debt and agency MBS in agency MBS and of rolling over maturing Treasury securities at auction. The FOMC noted that these actions should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
- dpc59 10y ago
  If you lean left you shouldn't be arguing for rent collecting oligopolies.
  - progressive_dad 10y ago
    I believe the standard "party line" on housing costs would be something akin to Sweden. Purchasing a property for the explicit purpose of renting it is de-facto barred. Its not illegal but must be approved by your local tenant/owner association (like a condo board or home owner's association). This has the net effect of raising rents, making it extremely difficult to rent in the first place, while keeping home ownership within reach for nearly everyone due to depressing any kind of housing bubble or gentrification through property acquisition and flipping. https://www.justlanded.com/english/Sweden/Sweden-Guide/Property/Buying-property https://www.justlanded.com/english/Sweden/Sweden-Guide/Prope...
- dpc59 10y ago
  If you lean left you shouldn't be arguing for rent collecting oligopolies.
WalterBright 10y ago
That doesn't have anything to do with setting up a commune, cooperative, or collective building ownership.
naveen99 10y ago
The free market bit was irrelevant. You are being downvoted for arguing an irrelevant point. Weather free or not, communes are possible in the us, which is what you wanted.
dv_dt 10y ago
There is no canonical free market. Free markets require enforcement of property rights (otherwise people can run around taking each others property). Once you have enforcement of property rights - there is some form of government. Once you start talking about all the various cases for property rights enforcement - you end up with various rules to try to manage fuzzy cases and protect property. You could claim that it's not a free market with the set of freedoms or policies that you'd like to have implemented, but to claim that the US is not a free market just because the Fed has taken some action seems like a fallacy to me. (BTW I agree with you in questioning the wisdom of that particular set of Fed actions..)

sremani 10y ago

That is quite a good way of putting things in perspective about Fed and free money building up the asset bubble, which is only made worse by stricter zoning laws and NIMBY. As far as downvotes go, HN leans left, that is not news, any conservative or libertarian views will collect the usual down votes. Strangely it happens in bunches too.

StanislavPetrov 10y ago
It isn't a left or right issue, its a reality issue. We in the USA do not have a free market, where prices are determined by market forces. Whether or not this is a good or bad thing is a completely different debate. The FED does not hide the fact that it buys MBS (mortgage backed securities) to prop up the housing market. This is the opposite of a free market (and only one of many ways the market is controlled). This isn't up for debate among members of the reality-based community. https://www.newyorkfed.org/markets/ambs/ambs_faq.html https://www.newyorkfed.org/markets/ambs/ambs_faq.html >The Federal Open Market Committee (FOMC) directed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York to purchase additional MBS and longer-term Treasury securities (see http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm http://www.federalreserve.gov/monetarypolicy/fomccalendars.h... for the most recent FOMC statement). The FOMC also directed the Desk to maintain its existing policies of reinvesting principal payments from the Federal Reserve’s holdings of agency debt and agency MBS in agency MBS and of rolling over maturing Treasury securities at auction. The FOMC noted that these actions should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
dpc59 10y ago
If you lean left you shouldn't be arguing for rent collecting oligopolies.
- progressive_dad 10y ago
  I believe the standard "party line" on housing costs would be something akin to Sweden. Purchasing a property for the explicit purpose of renting it is de-facto barred. Its not illegal but must be approved by your local tenant/owner association (like a condo board or home owner's association). This has the net effect of raising rents, making it extremely difficult to rent in the first place, while keeping home ownership within reach for nearly everyone due to depressing any kind of housing bubble or gentrification through property acquisition and flipping. https://www.justlanded.com/english/Sweden/Sweden-Guide/Property/Buying-property https://www.justlanded.com/english/Sweden/Sweden-Guide/Prope...
dpc59 10y ago
If you lean left you shouldn't be arguing for rent collecting oligopolies.

WalterBright 10y ago

That doesn't have anything to do with setting up a commune, cooperative, or collective building ownership.

naveen99 10y ago

The free market bit was irrelevant. You are being downvoted for arguing an irrelevant point. Weather free or not, communes are possible in the us, which is what you wanted.

dv_dt 10y ago

There is no canonical free market. Free markets require enforcement of property rights (otherwise people can run around taking each others property). Once you have enforcement of property rights - there is some form of government. Once you start talking about all the various cases for property rights enforcement - you end up with various rules to try to manage fuzzy cases and protect property. You could claim that it's not a free market with the set of freedoms or policies that you'd like to have implemented, but to claim that the US is not a free market just because the Fed has taken some action seems like a fallacy to me. (BTW I agree with you in questioning the wisdom of that particular set of Fed actions..)