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That implies housing has risks. Since 2009, that risk has been eliminated by the FED owning 30% of all mortgages on its balance sheet. We've nationalized housi
by arberx 4y ago
That implies housing has risks. Since 2009, that risk has been eliminated by the FED owning 30% of all mortgages on its balance sheet.
We've nationalized housing risk and privatized the gains.
- deleted 4y ago[deleted]
- atemerev 4y agoAnd the fed is absolutely, 100% riskless, right? Nothing ever will happen to it?
- treeman79 4y agoWell we still have 60 and 90 year mortgages as tricks to use. Plus paying for mortgages on places that don’t yet (never will) exist. So government can probably increase house prices several times over before whole thing collapses. See China for how that’s working out. (Not well)
- atomicnumber3 4y agoI'm not sure if you're being glib or not, but if something "happens to" the Fed, we have much bigger problems than anything as boring as investing risks. It probably means WW3 or California is seceding or something.
- donnowhy 4y agoI think atm the Fed is the main force holing the USA together, considering all the bi-partisan polarization all ways to divert the "voltage" across elite and commoner classes which are the real source of this tension. I'm saying that wealth inequality creates something quite comparable to 'voltage', this creates a tension which WILL get released (because physics). But due to active (social-)technological management this tension is getting re-focused into blue Vs red bi-partisan politics, as well as other expressions of winners fighting losers (including gender 'equality' tensions, trans and transphobics, etc..)
- TremendousJudge 4y agoIf something happens to it it'd be alongside some sort of low-probability event that will leave you with more pressing things to worry about than the value of your investments
- mitt_romney_12 4y agoIf the fed goes under then you have far bigger concerns
- hot_gril 4y ago"Risk-free" is a common term you'll hear in finances that basically means, no risk aside from a governmental collapse. That's still a risk but falls outside their scope.
- aeternum 4y agoNot sure if it counts as privatized when the vast majority of Americans are homeowners. The gov had a ton of programs to increase the home ownership rate over the last 50 years, they were somewhat successful. Now you have a situation where the networth of 65-70% of the population is tightly coupled to their home price. And we wonder why it's so hard to get them to vote for new housing. As Munger says, Show me the incentives and I'll show you the outcome.
- Keegs 4y agoThe majority of homes in America are occupied by their owners (this is what home-ownership rates measure). It is not true to to say the majority of American adults are homeowners - that ratio is a lot lower.
- aeternum 4y agoLooking at the flip statistic, 36% of households rent so the numbers do seem to add up. For many households, some of the residents may not technically share ownership of the house (not on the deed) such as kids or extended family living together, but still have a vested interest in the value going up.
- loldk 4y ago[dead]
- TheRealDunkirk 4y agoThere's enough government involvement to insure the paper-printing game everyone is playing, and that's all that counts. They guarantee the low end with the FHA, and that props up everything else.
- aeternum 4y agoRight, a better solution would be to package demand-stimulating legislation like FHA with supply-stimulating legislation like reductions in zoning restrictions. The results of stimulating demand (FHA and similar) without changing supply is econ 101.
- nvarsj 4y agoHousing in America was basically a backdoor pension system for the working/middle class. Without the dramatic rise in housing prices, the boomer generation would be struggling to retire.