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Long term real estate returns are roughly equivalent to bank fixed deposits. The higher returns are during periods of speculation in certain regions. While it
by sifar 7y ago
Long term real estate returns are roughly equivalent to bank fixed deposits. The higher returns are during periods of speculation in certain regions.
While it is true that a lot of real estate transactions used to happen in cash, one of the major increase in housing prices was easy availability of credit. Banks would extend credit to both the developers and buyers. However the developers weren't required to repay the loans as they were extended, allowing them to sit on the inventory and keep increasing prices.
While the cash crunch has contributed to decrease in RE prices, the banking/NBFC NPAs are also equally responsible.
I find this vilification of cash naive and disingenuous.
Naive for those who do not understand that many who deal in it earn too low to be taxed.
Disingenuous for those who understand and still propagate this myth.
Governments want to get rid of cash because it is a debt to them and they cannot easily confiscate it as they can money lying in a bank. Also cash provides a little safeguard against negative interest rates. Also transactions cannot be tracked or taxed. With digital transactions, the payment processors introduce a 1-2% tax on the economy.
- rohan_shah 7y agoI did not vilify cash in any way in my argument. I just stated my (little, unscientific) hypothetical analysis of the existing underlying situation. Ofcourse, getting rid of cash is very helpful to a "government" or "state" in collecting taxes, tracking as well as negative interest rates (even though I hope that is far away for India). But cash also helps get rid of corruption and any government which itself exists on the basis of black money will never do anything against black money which is what a factual analysis of the previous government will tell you. And the cash earners who earn too less to be taxed should be helped to get out of poverty which is only possible when they get a bank account and receive the money via direct benefit transfer which was meant for them instead of political goons. So it is no myth that the money Indian government was spending for the poor, never reached the poor and one of the reasons was because it was cash. And if we do not vilify corruption, I don't think any positive future is possible. *Not that the current government is white-washed and exists without black money, but the previous simply wasn't interested in solving the problem.
- sifar 7y agoI did not mean that about you, but in general. Sorry if it came across like that.