patrick.net

Heraclitusstudent says

Maybe credit whores are the smart ones...

Study for a decade on student loans.

Buy a nice house with a huge mortgage, FHA loan 3.5% down, preferably adjustable rates.

Show up at emergencies with nothing to lose.

Die deep in debt.

Remember: you won't take it with you.

Depends on what percentage of income is going into debt service while the person is alive. Spending the same percentage of one's income on renting an apartment vs. renting the money makes zero difference unless one is on the right side of appreciation vs. depreciation. Likewise for student loans and loans on cars and boats.

Being a debt whore when one can generate substantially higher rate of income than interest rate on the debt is indeed profitable.

Dan8267 says

Currency debasement of M3 is about 5% according to Shadow Statistics. Unfortunately, they are the only ones publishing M3 stats, so I cannot confirm the accuracy of their data, but it does sound reasonable and well within historic norms.

M2 debasement is still reported by the Federal Reserve. According to the Federal Reserve, M2 is being debased at an average rate of 6% per year over the past few years. So to merely break even, you'd need a CD or savings account that offered 6% interest.

I don't regard shadowstats as a reliable source as their inflation data can be easily disproved, but regardless, if you are going to use money supply as a measure, you should account for population growth, money lost overseas, and velocity. US population growth is roughly 1%/year--not a huge adjustment. But the amount of currency that goes abroad, while difficult to measure, is not insignificant. Finally, using money supply to determine "break even" is not ideal because it assumes all money is in circulation. Looking at velocity statistics, this is clearly not the case (below chart is money velocity)

Dan8267 says

My point is that the American people should not have to gamble in order to save. Of course, it's discouraging to savers

Dan8267 says

At zero percent currency debasement you could place your money in a zero percent checking account and it would be safe and available to society for the purpose of making loans to businesses, students, the government, etc

Banks will get their money, one way or the other. At zero inflation, they will charge money for savings and (more) money for checking.

Dan8267 says

The Federal Reserve creates money at the cost of nothing. Banks get to borrow this money for close to zero percent interest

Banks almost NEVER borrow from the Federal Reserve. Even during the last crisis, it was only foreign banks that used the Federal Reserve window.

Dan8267 says

The system of currency debasement is designed to help banks by letting them siphon wealth from the middle class, who pay the bulk of taxes including interest on the national debt. It is always profitable to borrow money at zero percent and lend it out for actual interest, regardless of the rate of currency debasement.

I'm no fan of the banks, but they don't borrow from the Federal Reserve to make money.

Dan8267 says

Currency debasement also decreases real wages over time as the typical productive worker must play the Red Queen's race just to keep his real wages. As such, currency debasement is a large cause of what yo describe.

There is no evidence that real wages perform better under low (or zero) inflation environments than they do under higher inflation environments. In fact, from what I can tell, real wages do better under moderate inflation.

Dan8267 says

Again, currency debasement does not improve the economy. Ultimately it severely hurts the economy because it hurts the middle class most of all. The middle class can buy less because of currency debasement and a strong middle class is the backbone of an economy. The purchasing power of the middle class is the greatest factor in promoting the Virtuous Cycle of spending and production. Our GDP could easily be several times its current value if the middle class wasn't squeezed so much. All the unemployed and underemployed people are lost economic opportunities that can never be recovered. You wouldn't want a factory you own to be idle, but that's essentially what currency debasement does to the factory of human capital.

It's amazing to me that you can write the paragraphs preceding this one, yet still follow by writing the above quoted. It's a strikingly similar process. Currency debasement has zero effect as long as the new money is distributed equally. The problem isn't that new money is created, the problem is that it isn't distributed equally. Or, more realistically, it isn't redistributed well enough.

tatupu70 says

I don't regard shadowstats as a reliable source as their inflation data can be easily disproved, but regardless, if you are going to use money supply as a measure, you should account for population growth, money lost overseas, and velocity.

Nor do I, but the M2 stats are even higher and come from the Fed directly. And M2 growth is higher than population growth. The bottom line is that the purchasing power of savings and wages are harmed by currency debasement. That fact is inescapable as siphoning purchasing power from the middle class and directing it to the big banks is the sole purpose of currency debasement.

tatupu70 says

Dan8267 says

At zero percent currency debasement you could place your money in a zero percent checking account and it would be safe and available to society for the purpose of making loans to businesses, students, the government, etc

Banks will get their money, one way or the other. At zero inflation, they will charge money for savings and (more) money for checking.

No one stated that banks should not be profitable. It would be impossible to have a banking system without it. However, the profits banks get should be from doing good for society, not by stealing from everyone.

tatupu70 says

Dan8267 says

The Federal Reserve creates money at the cost of nothing. Banks get to borrow this money for close to zero percent interest

Banks almost NEVER borrow from the Federal Reserve. Even during the last crisis, it was only foreign banks that used the Federal Reserve window.

Banks hold $1.99 trillion in treasury debt. At a 2% discount window, they are making $40 billion/year off of it. That's hardly chump change.

Banks are also being paid with taxpayers money at the tune of $4 billion/yr to not lend money!

tatupu70 says

Dan8267 says

Currency debasement also decreases real wages over time as the typical productive worker must play the Red Queen's race just to keep his real wages. As such, currency debasement is a large cause of what yo describe.

There is no evidence that real wages perform better under low (or zero) inflation environments than they do under higher inflation environments.

I don't know if you mean cost of living rises, CPI rises, or currency debasement when you say "higher inflation". What I do know is that currency debasement, by mathematical necessity, lowers the purchasing powers of wages, which is the definition of lowering real wages. It's psychologically and politically easier to lower employee wages by simply not giving raises to compensate for the declining value of money than it is to lower the nominal wages of employees. That's a fact.

It is also a fact that currency debasement punishes savers, which is exactly why two out of three Americans do not have sufficient emergency savings as the original post points out. Americans also do save enough for retirement. Almost 20 percent of people near retirement age have not saved for it. America has many problems, but saving too much isn't one of them.

Our banking system, in collusion with the government, has a war on savers.
The New Yorker: Shut Up, Savers!
The Economist: The war on "the war on savers"
Time Magazine: Government policies that discourage saving are one of the chief reasons that so many Americans fail to put money away regularly.

The first step to solving a problem is acknowledging it's existence.

tatupu70 says

Currency debasement has zero effect as long as the new money is distributed equally.

A point I made clearly here

You could literally increase the money supply by a factor of a hundred trillion and do it in a way that does not affect ANYTHING. Simply multiply everybody's digital and analog money by 100,000,000,000,000. If you had a five dollar bill in your pocket, you now have a five trillion dollar bill in your pocket. Provided you did this without changing the relative amounts of money in everyone's pocket, and by pocket I mean all their money storage devices, then nothing important would happen. The only affect would be that the price of everything, including your wages, would be multiplied by a hundred trillion. It would not in any way affect our trade balance or increase our exports.

However, the ENTIRE point of the currency debasement in our banking system is to unevenly distribute the new currency effectively transferring money from middle class savers and workers to big banks. You are not getting the interest payments from the national debt. You are making the interest payments. Even if you buy U.S. Treasuries, you are losing money because the debasement rate is greater than the interest rate. Only banks make money on Treasuries because they borrow at 0% to buy treasuries that pay 2.5%. You mathematically can't lose money under that rigged system if your the one rigging it.

That's why Elizabeth Warren has proposed that Student Loans Should Have Same Rate Big Banks Get.

Currency debasement is just one of many zero-sum fraud games that our banks play in order to make money at our expense. Banks and other businesses should make profits by benefiting society, not harming it. We should not reward destructive and undesirable behavior. Is it really a problem that America's rich-poor gap isn't big enough? Currency debasement increases the rich-poor gap.

Two out of three Americans do not have sufficient emergency savings

It's all Obama's fault!!!

I'm also curious as to the breakdown by race.

Dan8267 says

Banks hold $1.99 trillion in treasury debt. At a 2% discount window, they are making $40 billion/year off of it. That's hardly chump change.

That's not Federal Reserve borrowing at discount window rates. That's US Debt at market rates.

Dan8267 says

What I do know is that currency debasement, by mathematical necessity, lowers the purchasing powers of wages, which is the definition of lowering real wages. It's psychologically and politically easier to lower employee wages by simply not giving raises to compensate for the declining value of money than it is to lower the nominal wages of employees. That's a fact.

That's actually not a fact. If the treasury prints $1 gazillion dollars, gives them all to me, and I bury them in my backyard, that increased money supply does exactly nothing to real wages.

Now, very few people are burying money in their backyard, but the velocity has decreased substantially as inequality has gone up. So, it's more complicated than just using money supply increases.

Dan8267 says

Our banking system, in collusion with the government, has a war on savers.

The New Yorker: Shut Up, Savers!

The Economist: The war on "the war on savers"

Time Magazine: Government policies that discourage saving are one of the chief reasons that so many Americans fail to put money away regularly.

The first step to solving a problem is acknowledging it's existence.

I agree we have a problem--I just disagree on the root cause. Currency debasement is way down the list, IMO.

Dan8267 says

However, the ENTIRE point of the currency debasement in our banking system is to unevenly distribute the new currency effectively transferring money from middle class savers and workers to big banks. You are not getting the interest payments from the national debt. You are making the interest payments. Even if you buy U.S. Treasuries, you are losing money because the debasement rate is greater than the interest rate. Only banks make money on Treasuries because they borrow at 0% to buy treasuries that pay 2.5%. You mathematically can't lose money under that rigged system if your the one rigging it.

Interest payments from the national debt are not really relevant to currency debasement. The transferring of money from the middle class to the 1% has very little to do with currency debasement--it has everything to do with the loss of bargaining power of workers vs. owners. You have written very well on this topic so I don't think we disagree that it is a good part of the problem, at least. I think you can see this phenomena very clearly in corporate profits, and that obviously drives the stock market, as well. So, investments are growing fast while wages are stagnant. People who have money see their wealth grow quickly while people who have to work barely struggle to get by. Which is what we see now.

I agree that the financial sector in general--Banks, Wall St., etc.--are a blood sucking parasite on the economy. They add nothing, and cost immeasurable amounts. Hell, I'd be for nationalizing all banks and severely regulating Wall St.

But I don't subscribe to the Fed cult or think that currency debasement is a major problem. I just don't see any evidence of it.

Reality says

Being a debt whore when one can generate substantially higher rate of income than interest rate on the debt is indeed profitable.

You don't understand. Revenues are for workers/savers/losers.
The idea is to work just enough to be able to make the absolute minimum payments.
Have your house work for you and borrow more equity.
Who needs revenues when you can borrow more?

tatupu70 says

I don't subscribe to the Fed cult or think that currency debasement is a major problem

what we've got is the boomer echo also flooding in the job market, which depresses wages due to increased labor supply.

The boomers had the advantage of arriving in the pre-globalized 1970s economy, and it took 20 years to get everyone fully employed:

https://research.stlouisfed.org/fred2/graph/?g=1koc

What's worse now is we've got millions of boomers in their late 60s still working, keeping those jobs out of the hands of Gen X & Y.

Complicating matters is mfg, construction, and info jobs have been zero-growth at best:

(green line)

Health and social media, that's about it for our economy these days.

Dan8267 says

You could literally increase the money supply by a factor of a hundred trillion and do it in a way that does not affect ANYTHING. Simply multiply everybody's digital and analog money by 100,000,000,000,000. If you had a five dollar bill in your pocket, you now have a five trillion dollar bill in your pocket. Provided you did this without changing the relative amounts of money in everyone's pocket, and by pocket I mean all their money storage devices, then nothing important would happen. The only affect would be that the price of everything, including your wages, would be multiplied by a hundred trillion. It would not in any way affect our trade balance or increase our exports.

Well... if you keep debts labeled at the same nominal value (as they normally are), that amounts to complete debt jubilee. This means current gov bonds would become worthless. Many people would lose huge sums. Retirees would see their bonds portfolio become worthless. They may lose most of their savings.

Dan8267 says

And M2 growth is higher than population growth.

M2 growth of 5% = 2.5% real growth + 2.5% inflation.
Real growth includes population growth + productivity growth. Money needs to grow by at least that much just to prevent prices from going down.
Inflation was in fact lower than M2 growth implies because of changes in the velocity of money.

5-6% growth in M2 is totally normal to get the target inflation for the fed.

So, it's more complicated than just using money supply increases.

-----------

It's actually bery simple and any simple simon can see it plain as day without access to any FRED charts

Wages- flat
Housing - tripled
Gas - tripled
"Health""care"- quintupled
Food - doubled

People just continue to ask the wrong questions. Costs of living are derived from wages, not the other way around. How is that possible?

errc says

People just continue to ask the wrong questions. Costs of living are derived from wages, not the other way around. How is that possible?

Strategist will now explain why you are wrong and free trade with poor countries makes a lot of sense.

tatupu70 says

That's actually not a fact. If the treasury prints $1 gazillion dollars, gives them all to me, and I bury them in my backyard, that increased money supply does exactly nothing to real wages.

If you bury the money in your backyard, you have removed it from circulation and have, by definition, stopped the currency debasement from happening.

tatupu70 says

So, it's more complicated than just using money supply increases.

Any discussion about any subject matter physically cannot include ever minute detail. It is a cop-out to say, "it's more complicated than that" as that cop-out would apply to every statement every made about anything. If you actually accepted that cop-out, no book could ever be written on a subject matter.

Furthermore, none of the complications you allude to in any way negate the premise I've made: currency debasement the way it's designed and done in our banking system harms savers and wage earners.

Nor have you said anything to demonstrate that currency debasement as implemented in our banking system helps anyone but the banks.

tatupu70 says

Currency debasement is way down the list, IMO.

You're entitled to your opinion, but it does not contradict the facts I've stated. Nor does fixing the problem of currency debasement in any way interfere with anything else on your agenda. The fix is simple. The government creates money and lends it to itself at 0% interest. The government must pay back the money to deflate the currency back to its original level. Long term currency level is a constant. If more monetary units are needed, multiply everyone's currency reserves by a constant. Better yet, use a unit value of currency and just subdivided it by another two decimal places. You can increase the number of currency units without even changing the nominal prices and wages. Just start trading in nano-credits instead of micro-credits.

tatupu70 says

But I don't subscribe to the Fed cult or think that currency debasement is a major problem. I just don't see any evidence of it.

Have you saved up hundreds of thousands of dollars over the past 20 years just to see your money not able to buy the house it could have in 1999? Long-term saving is harmed by currency debasement. It may not be your problem, but it affects all savers and it encourages unnecessary debt.

As for how much of a problem it is, it's big enough to be worth solving especially since solving it does not interfere with any other reform.

Having money whose value is a constant also offers many other benefits including the ability to make meaningful and accurate long-term comparison of the prices of goods and services. Adjusting for CPI introduces a huge error in measurements taken over long periods of time. No scientist of engineer would use a metric that constantly and unpredictably changes. It's just plain stupid. Currency is not only a mechanism for the exchange of goods and services. It is also your fundamental accounting unit. What would be so bad about having honest, transparent, and accurate accounting? This is needed for any wise policy making regardless of your politics.

Heraclitusstudent says

Well... if you keep debts labeled at the same nominal value (as they normally are), that amounts to complete debt jubilee. This means current gov bonds would become worthless. Many people would lose huge sums. Retirees would see their bonds portfolio become worthless. They may lose most of their savings.

In this scenario, you wouldn't keep nominal values the same. You would multiply all credits and debts by the same constant.

Dan8267 says

If you bury the money in your backyard, you have removed it from circulation and have, by definition, stopped the currency debasement from happening.

I agree, but that makes the money supply calculations unreliable without taking money velocity into account, which you appear unwilling to do. Money supply doesn't tell enough of the story.

Dan8267 says

Any discussion about any subject matter physically cannot include ever minute detail. It is a cop-out to say, "it's more complicated than that" as that cop-out would apply to every statement every made about anything. If you actually accepted that cop-out, no book could ever be written on a subject matter.

Furthermore, none of the complications you allude to in any way negate the premise I've made: currency debasement the way it's designed and done in our banking system harms savers and wage earners.

Nor have you said anything to demonstrate that currency debasement as implemented in our banking system helps anyone but the banks.

Let's back up a second then. What exactly is your premise. How does currency debasement harm wage earners? You made a point that the extra money isn't distributed evenly causing some winners and some losers. The losers don't get a proportional increase in money so their purchasing power is decreased. I think we can all agree with that as a general theory. My contention is--it's not the debasement that is the problem, it's the distribution. And you seem to agree (if I understand you correctly).

Then you make some statements about banking and how debasement is purposely designed to enrich the bankers with a few shots at the Federal Reserve sprinkled in. That's where you lose me. Can you explain, in detail, exactly what the mechanism is that you think purposely hurts the middle class? How the new money is being distributed to bankers?

Currency debasement, as it is practiced today, is meant as a way to keep the economy from collapsing under the current inequality. It's good in that manner as an injection of liquidity as velocity is falling.

Dan8267 says

You're entitled to your opinion, but it does not contradict the facts I've stated

I don't think you've stated any relevant "facts". Or at least not any that exist in the real world.

Dan8267 says

The government creates money and lends it to itself at 0% interest. The government must pay back the money to deflate the currency back to its original level. Long term currency level is a constant. If more monetary units are needed, multiply everyone's currency reserves by a constant. Better yet, use a unit value of currency and just subdivided it by another two decimal places. You can increase the number of currency units without even changing the nominal prices and wages. Just start trading in nano-credits instead of micro-credits.

As stated previously--it's not that simple. You have to adjust currency for population, productivity, amount lost overseas, velocity, etc.

Dan8267 says

Have you saved up hundreds of thousands of dollars over the past 20 years just to see your money not able to buy the house it could have in 1999? Long-term saving is harmed by currency debasement. It may not be your problem, but it affects all savers and it encourages unnecessary debt.

All debt is someone's savings. There is no shortage of savings right now--just look at interest rates.

Heraclitusstudent says

errc says

People just continue to ask the wrong questions. Costs of living are derived from wages, not the other way around. How is that possible?

Strategist will now explain why you are wrong and free trade with poor countries makes a lot of sense.

I have hired a staff of 100, and a President to do the explaining for me. Let me know if I should fire anyone.

http://www.cnbc.com/id/102785680
The Senate voted Wednesday to give President Barack Obama "fast track" authority to negotiate trade deals—one of the final steps in a long political battle that pitted the White House against House Democrats.

The bill—which passed 60-38 in the Senate—will be sent to the president's desk later this afternoon, but it was not immediately clear when he would sign it.

Unions and most congressional Democrats say free-trade deals cost U.S. jobs and reward countries that pollute and mistreat workers. Obama and most Republican leaders say U.S. products must reach broader markets.

Strategist says

Unions and most congressional Democrats say free-trade deals cost U.S. jobs and reward countries that pollute and mistreat workers. Obama and most Republican leaders say U.S. products must reach broader markets.

They said this, they said that. No explanation.
Fire them all.

tatupu70 says

What exactly is your premise. How does currency debasement harm wage earners?

The Red Queen Race. Every year you don't get a 5% raise is a year your wages go down. Purchasing power declines 3 to 4% each year. Add to that the marginal tax rate and you need a 5% raise to make the same after-tax dollars with 4% currency debasement. Do you get a 5% raise every single year?

tatupu70 says

As stated previously--it's not that simple. You have to adjust currency for population, productivity, amount lost overseas, velocity, etc.

The current system does not do that. If it did, milk would cost the same as it did in 1913 or even less given technological advancements.

Dan8267 says

Every year you don't get a 5% raise is a year your wages go down. Purchasing power declines 3 to 4% each year. Add to that the marginal tax rate and you need a 5% raise to make the same after-tax dollars with 4% currency debasement. Do you get a 5% raise every single year?

Like I said earlier--there is no evidence that real wages perform worse under high currency debasement than under little or no debasement. If you have such data, I'd be curious to see it, because what I've seen is the opposite. IMO real wages are more a function of workers power.

If we had the current system with labor's lack of bargaining power and no debasement, workers would probably get a cut in wages each year. I can see it now--take this 3% cut or we have to let you go. There are 10 other people dying to get this job at the lower pay.

Dan8267 says

tatupu70 says

As stated previously--it's not that simple. You have to adjust currency for population, productivity, amount lost overseas, velocity, etc.

The current system does not do that. If it did, milk would cost the same as it did in 1913 or even less given technological advancements.

No, it certainly doesn't.

Dan8267 says

milk would cost the same as it did in 1913

Milk is a bad example given the domestic producers are basically losing money at current market prices.

Corn is also falling to the break-even producer price.

https://research.stlouisfed.org/fred2/series/M04005US16980M280NNBR

shows corn was ~0.70 a bushel in 1913, $16.50 in our debased money.

Actual corn price is around $4/bushel now, showing our money isn't as debased as you think it is.

http://www.omaha.com/money/with-no-sign-of-increased-demand-farmers-battle-falling-corn/article_64285831-2c09-537f-83e2-048fafde7dc8.html

The key thing is that profits require barriers to new entrants.

Nothing more walled off to new entrants than real estate. Can't build houses on top of each other, can't move supply around, either.

They made a boardgame about this, you know.

Real estate and health care are taking the lion's share of purchasing power away from working americans.

This is obvious, so obvious it is ignored, like the air we breathe, too obvious to notice.

The evil with real estate is that very little labor is required to run this rent-seeking. Just making sure the rent gets paid each month basically.
At least healthcare employs 15 million people and is one of the few growth sectors in that regard.

https://research.stlouisfed.org/fred2/series/CES6562000101

So, Bill, how many rent payments have you collected?

How many tenants have you interviewed? Do you think the HR departments in all companies are useless? Do you think all employers are useless?

How many tenant applicants have you background checked? Do you think all loan officers at all banks are useless?

How many non-paying tenants have you evicted? Do you think all lawyers and courts are useless?

How many roofs have repaired? Do you think all roofers are useless? Do you think buildings rejuvenate themselves? or do roofers, grounds keepers, carpenters, plumbers and electricians just show up without being hired by the building owners and managers?

If making sure rent is paid on time and making sure expenses are covered is so easy, why did so many wannabe landlords go bankrupt and get foreclosed upon? Why didn't you get into it to drive down their profit margin? Oh, yes, the competition to a housing service provider is not just other housing service providers, but also every Tom, Dick and Harry who is able to borrow and buy house (for living and for renting out).

Tell you what, trading stocks and commodities is far easier than operating buildings. Why don't you try making a living doing that first. LOL. Then you may develop an appreciation for what entrepreneurial risk taking means.

Reality says

So, Bill, how many rent payments have you collected?

How many tenants have you interviewed? Do you think the HR departments in all companies are useless? Do you think all employers are useless?

How many tenant applicants have you background checked? Do you think all loan officers at all banks are useless?

How many non-paying tenants have you evicted? Do you think all lawyers and courts are useless?

How many roofs have repaired? Do you think all roofers are useless? Do you think buildings rejuvenate themselves? or do roofers, grounds keepers, carpenters, plumbers and electricians just show up without being hired by the building owners and managers?

The answer to all the above questions is zero. He just likes to bitch everyone else has it so easy.

I would wager that the Dems,Leftist,Progressives are the only ones in financial straits.
There are only self made,rich R/C/Ts.

HEY YOU says

I would wager that the Dems,Leftist,Progressives are the only ones in financial straits.

There are only self made,rich R/C/Ts.

Bellingham Bill says

yes, this is the important point. One can identify parasites by removing them from the picture and seeing if anything changes wrt wealth-creation.

Homeowners are capable of contracting their own lawn care, yes?

Many SFH landlords leave lawn care to tenants. Many other landlords have large contracts with lawn care firms at discount price compared to individual contracts by homeowners; some even have their own landscaping crew. Workers usually prefer steady income instead of entrepreneurial risk-taking; whoever provide the safety buffer against those risks and take a cut in the conversion to steady cash flow is called an employer (especially temp agencies). Most people can agree that employers are not useless parasites.

People buying up existing SFHs and renting them out is pretty parasitical in this analysis.

I don't think it works as a profitable business model in the economic sense in the long run (at best yielding no better than average market opportunity cost), except for peculiarities created by tax and regulatory reasons, such as:

1. in areas where long term owners of property can have property tax rate locked in at lower rate; therefore the landlord can split the tax savings with the tenant instead of a new home owner having to pay higher property taxes.

2. as a shelter for capital gains; e.g. living in it for 2 years before selling and pocket 250k to 500k capital gain tax-free; in the long run, it's a viable strategy against inflation, especially avoiding the tax one would face due to inflation on capital assets.

3. in towns with high property tax and very good public schools: instead of parents buying the house to put the kids through school for a few years, renting for those years may result in lower transaction cost and property tax (see point 1 above).

MFHs are a different story, though the same wealth-transfer dynamic (reverse Robin Hood) exists. So much rent money is leaving the paycheck economy, never to return, except via government handouts and our $6T government in general.

It takes some entrepreneur to aggregate money from "the paycheck economy" to build, restore and maintain buildings. Otherwise, "the paycheck economy" would just find themselves packed tighter and tighter into less and less housing stock. When population demographic decline, entrepreneurs holding the wrong type of buildings would see their capital devastated. Successful entrepreneuers are the ones who can answer changes in market demand in a timely manner and be given more and more market power by the consumers thanks to his track record (via sustained profitability). What exactly is wrong with this dynamic? Why do people still think some government bureaucrats deciding when, where and how to construct new buildings is a preferrable solution even after decades of failed socialist experiements all over the world in that precise arena of economic life? The alternatives to multiple landlords competing against each other come in two flavors:

1. "Public housing," contrary to the mistaken belief of it being unowned or owned by the public, the real executive power in that scenario falls into the hands of monopolistic landlords whom the experiments usually call "officials." The tenants usually end up being far worse off in the long run under such monopolistic landlords than dealing with multiple competing landlords in a relatively free market place.

2. Subsidized private individual ownership of homes by occupants. There is some merit in encouragement of ownership society by small stake holders, the ultimate form of diverse competing free market. However, the last bubble and bust in real estate proved that doing it through the fiat banking system is flawed: big banks and the fiat central bankers become real rent seekers in such a system and they are far more concentrated than typical landlords . . . Furthermore, significant cross section of the population (I'd estimate 30-40% of adult population) is not quite up to the rigors of home ownership through economic cycles (budget, financial stability, and heck plain math skills to manage one's finance and cash flow); letting such people manage their own houses before teaching them the necessary skills only led to dilapidation and abandonment of existing housing stock, and that is highly counterproductive to the goal of making housing affordable.