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You say no value, but what about credit/borrowing? If I want to take out a mortgage, I have to get a loan. Somebody has to put up money to back the loan. Then

You say no value, but what about credit/borrowing? If I want to take out a mortgage, I have to get a loan. Somebody has to put up money to back the loan. Then maybe I sell this loan to somebody else to reduce my risk exposure, and so that they can get retirement income. That's finance. If you couldn't take out a loan, houses would certainly be cheaper. But it would likely not be cost effective to build them if you can't amortize the expense over 30 years. If you had to pay 100% cash for housing, the poor would never be able to afford them, I assure you Are you saying this isn't useful? Same question re: credit cards. I do agree that government policy has led to excessive risk taking and wealth inequality, especially the federal reserve. But I wouldn't pin that on the finance industry. Moreso populist tendencies seeping into what should be a hard numbers and risk focused profession. Everybody likes easy money

nly 5y ago
Alternatives to mortgages already exist in the form of Sharia compliant shared-ownership products. Effectively what you do is pay rent on the fraction of the house you don't own, while purchasing the rest at a regularly re-evaluated rate. In this model there's no debt and therefore no leverage. Properties have to be bought by either very wealthy investors or the funding has to be crowd sourced.
- adam_arthur 5y ago
  Hmm the mechanism isn't clear to me. What do you mean by "pay rent on the fraction you don't own". You buy a piece of the house all cash, and rent the other parts? Doesn't this imply it must be a multi-family unit? And yeah, with no debt, only the wealthy will be able to afford properties. But maybe I don't understand the mechanism.
  - nly 5y ago
    A bunch of investors buy 100% of the property and own it through a holding company under mutually agreed investment terms. The tenant rents the property at the market rate, but gets the option to buy it bit by bit, at the current market price. When they buy e.g. 20% of the property, their rent goes down 20% (because they only pay market rent on the 80% part they don't own). Fairly simple really.
piva00 5y ago
> single point of failure on something that by itself generates no value in real terms. It does generate value by increasing our leverage, that is it. This was my point of "no real value". The only value is to advance the future into the present, at the cost of interest. This value is also the critical part making the system brittle, we advance the future far enough until the pressure on the system is too large and then a single spark lights the whole pile on fire. We have a "market correction", meaning: human suffering in humongous scale because some people were too greedy and wanted the future now instead of being able to wait a few years. And worse, the existence of this system forces everyone who is not wholly accepting it into a disadvantaged position because your competitor is going to take advantage of cheap credit if you try to be cautious, so there is no incentive to not play the game, at all.

nly 5y ago

Alternatives to mortgages already exist in the form of Sharia compliant shared-ownership products. Effectively what you do is pay rent on the fraction of the house you don't own, while purchasing the rest at a regularly re-evaluated rate. In this model there's no debt and therefore no leverage. Properties have to be bought by either very wealthy investors or the funding has to be crowd sourced.

adam_arthur 5y ago
Hmm the mechanism isn't clear to me. What do you mean by "pay rent on the fraction you don't own". You buy a piece of the house all cash, and rent the other parts? Doesn't this imply it must be a multi-family unit? And yeah, with no debt, only the wealthy will be able to afford properties. But maybe I don't understand the mechanism.
- nly 5y ago
  A bunch of investors buy 100% of the property and own it through a holding company under mutually agreed investment terms. The tenant rents the property at the market rate, but gets the option to buy it bit by bit, at the current market price. When they buy e.g. 20% of the property, their rent goes down 20% (because they only pay market rent on the 80% part they don't own). Fairly simple really.

piva00 5y ago

> single point of failure on something that by itself generates no value in real terms. It does generate value by increasing our leverage, that is it. This was my point of "no real value". The only value is to advance the future into the present, at the cost of interest. This value is also the critical part making the system brittle, we advance the future far enough until the pressure on the system is too large and then a single spark lights the whole pile on fire. We have a "market correction", meaning: human suffering in humongous scale because some people were too greedy and wanted the future now instead of being able to wait a few years. And worse, the existence of this system forces everyone who is not wholly accepting it into a disadvantaged position because your competitor is going to take advantage of cheap credit if you try to be cautious, so there is no incentive to not play the game, at all.