3 ms·

Until there's mass defaults

by gbasin 4y ago

gruez 4y ago
That's when you have the government bail them out :)
- BizarroLand 4y ago
  And then the people who profited in the interim buy up all of the cheap surplus, sit on it for a few years and then trickle it back out as the prices return to normal, making massive returns on their investment, profiting off of the misery they created in the first place. And you can't even be mad at them for it because there's no collusion, no intent to manufacture the disaster, no single person responsible for it all, this is just the consequence of economic torture by a hundred thousand cuts. Their hands are clean even though the damage is still done.
  - imtringued 4y ago
    Well, if only there was a way to let the market say that there is too much financial capital and tell lenders to go away. It's actually quite stupid. As you said, no single person is responsible. You have this gold standard thing. The reason why it doesn't work is that gold or money is the financial equivalent of real estate. You don't need money in itself for anything. You need money to trade your labor in for products and services, as a medium of exchange. It's analogous to a bazar except you must go to this specific bazar and there is a limited number of stalls. You only need a stall for 5 minutes to do your transaction, you don't need the stall itself. We have collectively decided that people have the right to own these stalls. Here is the problem. If you are young and you have to work, you need to go to a stall and do transactions that let you sell your time. However, all the stalls are already taken by older people. They won't let go of their stalls, they want to take them into the grave, because they are scared of not having a stall when they really need it. So instead, they rent out the stall and let you use it for a short amount of time. Now let's say the interest rate demanded is way too high and you refuse to borrow and fall for the debt trap. What are you going to do? Stay unemployed? Ok, but now you have lots of time to think and organize and a clear group of people that you dislike. This is the perfect growth medium for extremism. So, we did away with a fixed number of stalls. Instead, we have decided to give everyone a stall. The problem is that those old people are now buying a second, third, hundredth stall. The amount of free stalls remains laughably small, forcing the government to keep increasing the number of stalls exponentially. When you think about it, those stalls are public property and people who have no business blocking them are wasting everyone else's time. It's like someone is parking in the middle of the road and blocking traffic. Normally you would call the police and they will confirm the traffic violation and then tow the car away and fine the owner. We don't do this with the stalls. There is no incentive for anyone to get on with their business as quickly as possible, so people grab as many stalls as possible. There is no opportunity cost to them but there is a huge opportunity cost to those who need stalls but can't get them. This is where the exploitation of the have nots by the haves originates. There are enough stalls for everyone but nobody is giving up the extra stalls that they don't need immediately. The wrong/incorrect allocation of stalls toward those who don't need them and away from those who need them is at the root of the problem. In theory, a market would automatically solve this problem. Why doesn't it? My argument is that we need to introduce a fee on the stalls to punish slowpokes and make sure people keep those stalls free if they don't need them. This means that if people are refusing to rent a stall, the owner of the stall would be left with an asset that is losing them value instead of a tool that can be abused for power. In short, the problem is that the interest rate must become negative to discourage people from indebting other people against their will when an economy that is no longer growing (for short bursts or maybe even forever) has no need for further debt, debt that can only be paid through inflation.
    - BizarroLand 4y ago
      If I were king of the country, I would institute a federal property tax on single-family homes that is equal to the state property tax times the number of homes that you own for as long as homelessness is over 0.05%. Right now, we're at 0.2%, so homelessness would need to be reduced 75% in order to obviate the tax. Further, if a non-human, non-bank entity was listed as the owner of the home there would be an automatic additional federal 2x state property tax fee on the property as well. These tax payments would further not qualify to reduce the taxes owed on your other incomes. Banks and other such lending agencies would only be subject to the property tax penalty if they did not list the home for sale at fair market value within 60 days of acquiring the deed and they would be required to accept an offer that met the fair market value requirement. (i.e., if they only got bids for $50k under fair market value, then they wouldn't be required to accept those bids). The monies generated would be used to fund anti-homelessness measures across the country. This would make it unbearably onerous to own more than 2 homes for all but the richest Americans, and it would make it so that people who are using real estate ownership as an income producing machine would lose out on that income. This decree would be set to roll out over a 4 year period to give the mom and pop airbnbers and other non-financially entrenched in the real estate market companies time to liquidate their equity in the housing market. Those companies that are fully dependent on rental income from single-family homes would have no motivation to purchase the newer homes on the market as each additional home would add a federal 1X multiplier to their tax burden, housing would decrease in value, more people would be able to buy in, apartments and multi-family homes would become more readily available and the prices would decrease, more people would be able to afford to rent an apartment, and fewer people would be homeless. That's a win all around except for any company that fills its pockets by sleeping on its horde of unused homes like ancient dragons and ill-gotten gold.

Until there's mass defaults

by gbasin 4y ago

Until there's mass defaults

gruez 4y ago

That's when you have the government bail them out :)

BizarroLand 4y ago
And then the people who profited in the interim buy up all of the cheap surplus, sit on it for a few years and then trickle it back out as the prices return to normal, making massive returns on their investment, profiting off of the misery they created in the first place. And you can't even be mad at them for it because there's no collusion, no intent to manufacture the disaster, no single person responsible for it all, this is just the consequence of economic torture by a hundred thousand cuts. Their hands are clean even though the damage is still done.
- imtringued 4y ago
  Well, if only there was a way to let the market say that there is too much financial capital and tell lenders to go away. It's actually quite stupid. As you said, no single person is responsible. You have this gold standard thing. The reason why it doesn't work is that gold or money is the financial equivalent of real estate. You don't need money in itself for anything. You need money to trade your labor in for products and services, as a medium of exchange. It's analogous to a bazar except you must go to this specific bazar and there is a limited number of stalls. You only need a stall for 5 minutes to do your transaction, you don't need the stall itself. We have collectively decided that people have the right to own these stalls. Here is the problem. If you are young and you have to work, you need to go to a stall and do transactions that let you sell your time. However, all the stalls are already taken by older people. They won't let go of their stalls, they want to take them into the grave, because they are scared of not having a stall when they really need it. So instead, they rent out the stall and let you use it for a short amount of time. Now let's say the interest rate demanded is way too high and you refuse to borrow and fall for the debt trap. What are you going to do? Stay unemployed? Ok, but now you have lots of time to think and organize and a clear group of people that you dislike. This is the perfect growth medium for extremism. So, we did away with a fixed number of stalls. Instead, we have decided to give everyone a stall. The problem is that those old people are now buying a second, third, hundredth stall. The amount of free stalls remains laughably small, forcing the government to keep increasing the number of stalls exponentially. When you think about it, those stalls are public property and people who have no business blocking them are wasting everyone else's time. It's like someone is parking in the middle of the road and blocking traffic. Normally you would call the police and they will confirm the traffic violation and then tow the car away and fine the owner. We don't do this with the stalls. There is no incentive for anyone to get on with their business as quickly as possible, so people grab as many stalls as possible. There is no opportunity cost to them but there is a huge opportunity cost to those who need stalls but can't get them. This is where the exploitation of the have nots by the haves originates. There are enough stalls for everyone but nobody is giving up the extra stalls that they don't need immediately. The wrong/incorrect allocation of stalls toward those who don't need them and away from those who need them is at the root of the problem. In theory, a market would automatically solve this problem. Why doesn't it? My argument is that we need to introduce a fee on the stalls to punish slowpokes and make sure people keep those stalls free if they don't need them. This means that if people are refusing to rent a stall, the owner of the stall would be left with an asset that is losing them value instead of a tool that can be abused for power. In short, the problem is that the interest rate must become negative to discourage people from indebting other people against their will when an economy that is no longer growing (for short bursts or maybe even forever) has no need for further debt, debt that can only be paid through inflation.
  - BizarroLand 4y ago
    If I were king of the country, I would institute a federal property tax on single-family homes that is equal to the state property tax times the number of homes that you own for as long as homelessness is over 0.05%. Right now, we're at 0.2%, so homelessness would need to be reduced 75% in order to obviate the tax. Further, if a non-human, non-bank entity was listed as the owner of the home there would be an automatic additional federal 2x state property tax fee on the property as well. These tax payments would further not qualify to reduce the taxes owed on your other incomes. Banks and other such lending agencies would only be subject to the property tax penalty if they did not list the home for sale at fair market value within 60 days of acquiring the deed and they would be required to accept an offer that met the fair market value requirement. (i.e., if they only got bids for $50k under fair market value, then they wouldn't be required to accept those bids). The monies generated would be used to fund anti-homelessness measures across the country. This would make it unbearably onerous to own more than 2 homes for all but the richest Americans, and it would make it so that people who are using real estate ownership as an income producing machine would lose out on that income. This decree would be set to roll out over a 4 year period to give the mom and pop airbnbers and other non-financially entrenched in the real estate market companies time to liquidate their equity in the housing market. Those companies that are fully dependent on rental income from single-family homes would have no motivation to purchase the newer homes on the market as each additional home would add a federal 1X multiplier to their tax burden, housing would decrease in value, more people would be able to buy in, apartments and multi-family homes would become more readily available and the prices would decrease, more people would be able to afford to rent an apartment, and fewer people would be homeless. That's a win all around except for any company that fills its pockets by sleeping on its horde of unused homes like ancient dragons and ill-gotten gold.