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The owner won't hire a couple of cooks at $20 an hour because he won't be able to pay off his mortgages anymore. The banker sits behind all this and collects hi

• Ericson2314 5y ago
  > capital owners that lend around money at extortionate rates and run to the nanny state to print money and save their skin whenever their bets go sour. Guess which strata gets most of the flak. Your heart is in the right place, but you are doing the devil's work by accident. "extortionate rates" and "printing money" do not happen at once! We have low interest rates, which are good for debtors. The banks now will get very little interest on those mortgages, so that can't be the sole piece of they are making a killing. What also happens is low interest loans allow the value of land to go up, and land speculation works too well. Worse, there are laws and other things preventing density so the desire to have as many tenants as possible doesn't actually reduce the cost of floor area.
  • imtringued 5y ago
    It's actually quite interesting. Keynes figured out that government stimulus works but it only solves the money problem. When you solve the money problem people simply flee into a different asset that maintains its value. That asset is land. So the business cycle also results in a real estate cycle. "Solving" the dot com bubble encouraged land speculation and ultimately ended in 2008. The problem isn't the stimulus although there are alternative proposals to reduce the amount of government intervention. Land is simply unique in the fact that it is already there and private land ownership is merely the right to exclude people from the land. There simply isn't any good argument for why money earned off the land itself should go to a private individual. It should go to the government because it is protecting the land with its army and building infrastructure to maintain its value.
    • strix_varius 5y ago
      > There simply isn't any good argument for why money earned off the land itself should go to a private individual. It should go to the government because it is protecting the land with its army and building infrastructure to maintain its value. Is this not what happens, in a distributed way, via property taxes?
  • yobbo 5y ago
    > The banks now will get very little interest on those mortgages Banks make relative profit on rates. Lower rates usually means the relative profit increases. Then, because as rates fall and prices increase, the volume of mortgages increases. As long as rates fall, banks win.
    • Ericson2314 5y ago
      > Banks make relative profit on rates. True > Lower rates usually means the relative profit increases. The spread increases? Not necessarily. > Then, because as rates fall and prices increase, the volume of mortgages increases. Because housing prices go up in response to lower rates, I am not sure that is the case. You can almost think of the total payment being the same, and adjusting the principle/interest ratio. I think large exurban tracks are how they try to boost volume. > As long as rates fall, banks win. Doesn't follow from the rest. Homeowners---whoever can afford it, typically do well relative non-homeowners who really get screwed over here. Homeownership in general is bad, in that other ways of doing housing would result in better land use and growth, but this is because low density is loose-loose, not because banks make more money that way.
• notanzaiiswear 5y ago
  Have you looked at interest rates lately? The times of "extortionate rates" are long gone.
  • b3morales 5y ago
    The Fed's rate might be low, but is that reflected in rates for consumer debt?
    • josephcsible 5y ago
      ...Yes? 2.49% auto loans are common, and some people can get even better. Mortgages are similarly cheap.