patrick.net

I agree. 30 year mortgage for a wooden box that sits out in the rain is insane. 20 years is bad enough. Actually, I'd say longer car loan's make more sense because they are actually made of steel and plastic and hold up better than a wooden house. Plus, they are easy to move.

10 year mortgage's would bring the price of housing down dramatically. My personal belief is that if you can't save enough to purchase it outright in 6 years, then it's too expensive. 6 years is a long time for me to trade my working skills. I'd consider longer perhaps for a property that was more than a wooden box (large tract of land that produces something, farmland, timber, minerals, water power, wind power).
Tom

EconPete says

People need to grow up and live within their means.

I agree with all that you said, however...

Another solution to the above would be if "their means" were to get better too.

The finger wagging always seems to be toward the victim!

TheBourneIdentity says

30 year mortgage for a wooden box that sits out in the rain is insane. 20 years is bad enough.

So you believe limiting access to credit will help the working man? Banks would love nothing better than to get rid of long term fixed paper-especially at these low rates. I think at some point the banks and government will advocate marking mortgages to a variable rate like they do in many other countries. If we start to see interest rates rise, you will hear the sob story from the banks. Then people may long for the "good old days" of 30 year fixed rate mortgages

E-man says

1year is best
3 years is not bad
5 years is good
10 years is kind of ok
15 years is kind of long
30 years is long
100 years is very long

>So you believe limiting access to credit will help the working man? Banks >would love nothing better than to get rid of long term fixed paper->especially at these low rates.

No, not all credit. I think some credit is actually very helpful. I would put things like credit cards used to buy things people don't need (Like my ex-wife who used to love to buy more plastic toy shit for the kids than they could ever use), expensive dinner out twice a week that they really can't afford, $100,000 in college loans for "Women's Studies", under the category of bad credit. Credit used to perhaps buy tools I need for my plumbing job, or my tractor to plow my field, or my Engineering degree, would be good kinds of credit.

That said, how long you get stuck with the debt is an important consideration. I'd say, perhaps, 30 years to pay off my tools for my plumbing job might be a little nutty, wouldn't you? How about 20 years, still nutty? How about 10?

Tom

EconPete says

I am not advocating that the government steps in and regulates the banking industry.

True. It is impossible to regulate stupidity.

TheBourneIdentity says

if you can't save enough to purchase it outright in 6 years, then it's too expensive.

Agree. This is a correct time frame. On average people move every 7 years or so.

E-man says

Japan has 100-year

I think those went out with the popping of the bubble in the early 1990s. These days the "standard" mortgage is 35 years.

MoneySheep says

Agree. This is a correct time frame. On average people move every 7 years or so.

So what? Why do you think someone should have to have it completely paid off before they move?

Mort-gages shouldn't be allowed at all. They just help inflate land prices.

wthrfrk80 says

Mort-gages shouldn't be allowed at all. They just help inflate land prices.

Wrong. They allow the middle class to avoid being at the mercy of the 1% for their whole life.

tatupu70 says

Wrong. They allow the middle class to avoid being at the mercy of the 1% for their whole life.

Or help enslave them to the 1% for their whole life.

Tomato, tomato!

I think 15 years should be the limit. At least 20% down as well. No more "funny" loans. Fixed rate only.

Oh, I think the 30 is great. Just got one at 3.75%. I fully expect to, within the next five years, to be able to buy fixed income that well exceeds that deductible cost to me. Those rates will rise simply because bond vigilantes will no longer cooperate with our profligate spenders in the U.S. Govt. and debt dependent populace. In the meantime, I'll continue doing what I've been doing for a decade: buy precious metals, especially on dips like recently, with the cash flow I have beyond the (lower) monthly payment of my 30-year (vs a 15 or 10).

Otherwise, I agree we're too reliant on debt in this country. But that's a cultural phenom that comes from the top down as much as the bottom up. Every dollar in circulation in our fiat $$ system exists only because the bankers (from retail up to the Fed) loan it into existence -- from nothing, backed by nothing. In other words, we are all expected to be debt slaves to these institutions in order to be allowed to have currency they functionally print out of thin air.

Meanwhile, the Fed run Cartel has rates pegged at ZERO, which means savers can't accumulate capital fast enough to purchase what they'd like since they're currently subsidizing banks (in order to recapitalize them from their previously lousy loans, etc.) and the very policy that encourages more debt.

But to the point, the biggest difference between family wealth and no family wealth is the use of debt vs. savings. Those who suspend immediate gratification are those who are most successful. Those who buy on the come end up slaves to circumstances. We, as a nation, need to incentivize capital formation and investment, not consumption and non-productive debt generated from monetary expansion (e.g. redistribution of the national economic seed-corn)... yet we more closely follow the ways of Krugman-Keynes than we do Mises-Paul.

Leopold B Scotch says

yet we more closely follow the ways of Krugman-Keynes than we do Mises-Paul.

Krugman sure doesn't think so. Nor do any non-Paulistas.

I think you guys have been out in the collective renters "elements" too long. The problem isn't the length of mortgages, or mortgages at all for that matter. The problem was the value of the homes, the terms of the mortgage and the ability of the debtor to pay off the mortgage. That was only a 00's phenomena, the system has worked fine for decades up to this point.

The bigger problem is insurance companies making people insure their house for 2 to 3 times the value of the house. And insurance monopolies like Florida's Citizen single payer insurance company with is great insight to what a single payer healthcare system in this country would look like.

Florida told insurance companies they couldn't raise the rates back in 08, 10% back when the average policy was $800 a year. All of the insurance companies bailed and Florida created Citizens a subsidized ins company. A state created monopoly, which left unchecked has festered into over $3,0000 a year average policy for most homes valued $97,000 or less. That's with a 250K replacement value.

That 3,000 a year is $250 a month on top of the mortgage, that only impedes the ability to repay the loan, and only serves to make Rick Scotts buddies richer.

Leopold B Scotch says

We, as a nation, need to incentivize capital formation and investment, not consumption

I'm not sure you understand how economics works. You need consumption or else there is no need for capital.

Our problem right now is that we have too little consumption, not too much. And too much capital sitting idle, not too little.

You've got it exactly backwards.

CaptainShuddup says

A state created monopoly, which left unchecked has festered into over $3,0000 a year average policy for most homes valued $97,000 or less.

That is a great point. The additional costs of owning real estate are generally controlled or regulated by the government (insurance, property taxes, building permits, etc.) Obviously the government is greatly involved in mortgages also, but at least it is still basically a private party transaction between you and the institution.

I don't know much about the Florida situation, but I'm sure the government heralded it as a way to get the greedy insurance companies out of the state and keep expenses "reasonable." For all those who cry out to limit mortgage options, wait until the government starts to get more heavily involved and looks to run those greedy banks out of the mortgage business (like they did with student loans).

tatupu70 says

Leopold B Scotch says

We, as a nation, need to incentivize capital formation and investment, not consumption

I'm not sure you understand how economics works. You need consumption or else there is no need for capital.

Our problem right now is that we have too little consumption, not too much. And too much capital sitting idle, not too little.

You've got it exactly backwards.

No. I understand how economics works differently than those like you who echo the prevailing neo-keynesian/monetarist theories. You grossly misunderstand what wealth is, or what causes its formation.

Let's make this as simple as possible: consumption without savings and capital formation = hand to mouth economy.

For Keynesian to work (Or any of its consumptionist offshoots)you have to have an originary pool of wealth to redistribute to feed consumption. Without it, you have no theory. In other words, the model you're promoting has the cart before the horse. The only reason it appears to work is because there is a history of accumulated capital that serves to feed the consumptionist approach.

However, what's taken place over many decades is the economic equivalent of having regularly raided the stores of seed-corn, giving it to others to "spur the economy along" with more consumption. On the short run, nobody notices the problem because everyone feels a full belly by eating the seed corn, while some actually plant some of their seed-corn and start growing.

However, these new growers, too, soon have some of their stores of seed corn taken from them and redistributed to the masses. Each round of "redirection to encourage consumption" actually negatively affects the economic yield of the economy as a whole as capital continually gets redirected away from stewards who can build / grow it to the overall benefit of society (granted, a gradual, long-term process) and into the hands of those who primarily eat it at the behest of the short-term economic mentality that is politically popular with the masses because it bestows a standard of living upon its beneficiaries ahead of the schedule of the natural progression.

Eventually, and inevitably, however, the efficacy of this degrades as each round produces less actual growth-oriented behavior, and more purely frivolous consumptive behavior -- until the stores of seed corn (the history of capital formation) hits a critical point that the economy At-Large begins to feel the ensuing famine.

Then, we get to experience Hemingway's observation about how one goes bankrupt: Very gradually, and then suddenly.

We've crossed the line. Right now we need to remove the barriers to capital formation, to allow those capable of increasing the economic yield through actual wealth creation / real improvements in economic standards of living to actually do so.

Prevailing policy promotes free lunch economics -- that one needs only to consume more to be wealthy, to rack up more and more debt (unproductive dead-weight debt is fine) in order to become rich. And yet we wonder why the economy does not recover? While proponents of such lunacy say "we just have not been consuming enough" or " if only people had more and more debt".

Rabbit-hole crazy talk, yet embraced by all to many people - most indoctrinated from the start with basic economics in High School, Samuelson texts in College, etc. It's killing the economy.

'

[I should be clear -- I am not defending corporatism or bankster cartelism. These forms of corporate parasitism are feeding off the seed-corn and need to be cut off. No bailouts at the expense of everyone else.]

Leopold B Scotch says

Rabbit-hole crazy talk

You wrote a long post that was completely BS. You didn't address any of my points.

Do you disagree that interest rates are at all time lows? That there is all kinds of available capital looking for investments?

How does that jibe with your distorted view of the world?

tatupu70 says

MoneySheep says

Agree. This is a correct time frame. On average people move every 7 years or so.
So what? Why do you think someone should have to have it completely paid off before they move?

Why? About half of people I met in SD said they are investors, pre-bubble and now, now because they are stuck with the houses. Their idea is to flip or do a HELOC koolaid.

The truth is you build wealth by hanging on to houses for decades, not flipping them. So why 7 years? This is an emprical average and not an academic average. In real life people do tend to be thinking of moving at around 7 years. If your house is paid off, you will have a smart thought, "Why move, I have my house free an clear." If you are smart and stay, you begin to accelerate your wealth building without knowing it.

MoneySheep says

The truth is you build wealth by hanging on to houses for decades, not flipping them

Sure--I agree with that.

If, at all possible, you should buy a place and stay there. But that has nothing to do with the pros and cons of a 30 year mortgage.

tatupu70 says

Leopold B Scotch says

Rabbit-hole crazy talk

You wrote a long post that was completely BS.

So sayeth tatupu70. Yeah verily. Yeah Verily.

You didn't address any of my points.

Hah. Right after you simply dismiss my entire post as "completely BS" without addressing any of the sub points... -- Only re-asking a new question and one of the old?

I addressed each of your points, some more directly than others. You just don't fully comprehend what I'm getting at through your neo-Keynesian, Red-Tinted Glasses.

Do you disagree that interest rates are at all time lows?

That's your first mention of interest rates. But, of course -- That they are record low is obvious. They are there because policy makers have manipulated markets in such a way, financed by raiding the seed corn I was talking about before, and bestowing it upon / using it to intervene in the lending market.

So what? And do have you any explanation as to why nobody bothers to borrow at these rates?

That there is all kinds of available capital looking for investments?

Again, why don't they bother to invest it? Your explanation is probably going to be "because they won't until people start spending more to assure them it's worth investing." And around and around you go: if only we uproot those stores of savings and send it into the hands of those who will consume it, we'll all be better off.

How does that jibe with your distorted view of the world?

There are many reasons cash is sitting idle right now. They include (but are not limited to):

1. The last time folks had tons of cash (thanks also to artificially low interest rates, thanks to Greenspan's intervention, the entire economy restructured around those rates and how they flowed through the credit system and into housing and real estate. This was exacerbated by A) legislation requiring lenders to lend to one and all regardless of actual qualification B) such readily available money corrupting both the credit and housing markets with get-rich-quick, F-All bubble mentality.

2) Smart business people see monetary intervention and policy stimulus as one off, temporary events, and are therefore reticent to make the same mistake pending a more organic, self-sustaining (non bailout dependent) recovery to emerge.

3) The unit of account (our currency) is highly corrupted and unreliable as is reflected in the ever-increasing volatility as market participants struggle to make heads or tails of proper market pricing. But the pricing mechanism of the market is n breakdown mode, and those with capital hold tight.

That aside, you're posting current consequences of existing policy and asking me to explain them through my view. I just responded partially in-kind above.

What's your explanation for these circumstances?

Rather than distorted, my view is one that actually provides an explanation for what's going down, rather than some cart-before-the-horse theory-cum-policy resting on the foundation of "saving is horrible" and "if we only spend enough we'll all become wealthy"

Explanation?

tatupu70 says

So what? Why do you think someone should have to have it completely paid off before they move?

Not necessarilly paid off. If you are just making the minimum monthly payment on a 30 year mortgage, typically year 7 is when you have paid enough interest and principal down to recoup your downpayment and initial transaction costs. Plus or minus a couple years depending where you are.

Of course, this assumes the market hasn't declined in those 7 years. . . .

wthrfrk80 says

tatupu70 says

Wrong. They allow the middle class to avoid being at the mercy of the 1% for their whole life.

Or help enslave them to the 1% for their whole life.

This mortage = slavery rhetoric is wearing a bit thin... Historically, the last decade has been the only decade for generations that housing hasn't proven to be far better for your financial position in life than renting.

Claiming taking a mortgage on a home within 2-4x your income is tantamount to slavery is nonsense. Even taking a loan out 20x your income is far from slavery...

You can still get out from underneath that situation VERY easily...

It's called WALK AWAY.. and if need be due to multiple refinancings... declare bankruptcy. Then INSTANTLY they are in the same situation as every renter on this board again.. 0 debt.. maybe tarnished credit for a few years... and a little less net worth. But they can take advantage of all those "amazing" rental deals like anyone else.

So stop calling mortgage debt .. slavery. It makes housing bears sound delusional.

Philistine says

Of course, this assumes the market hasn't declined in those 7 years. . . .

That'd be very bullish assumption,hence renting makes sense until a home starts appreciating.

Inflated and Falling Houses says

Not true at all.

The longer you hold onto a depreciating asset, the greater your losses.

You might as well just kill yourself.. cause you are a depreciating asset... Cut your losses now why don't you.

Inflated and Falling Houses says

MoneySheep says

The truth is you build wealth by hanging on to houses for decades

Not true at all.

The longer you hold onto a depreciating asset, the greater your losses.

Well, that's the way it would be, but for the massive intervention in monetary policy that constantly injects more and more money and credit into the system, both of which are out of thin air / unbacked (e.g. expanding monetary policy).

It should therefore come as no surprise that any asset tied to credit availability should find the asset's price inflating for no other reason than the authorities are simultaneously inflating the money supply which is injected into the economy via the credit system. (Look at the prices for higher education, for example, where so many receive easy access to credit?)

In a sound money system (one that is not constantly devalued / debased), houses would indeed be depreciating assets requiring annual input to keep functioning. Instead, houses are magically bestowed with market value in a way that is, in its most basic sense, no different than the mechanism that magically bestows wealth upon citizens of a city where the prices of what they own constantly rise simply because one of their residents is a very effective, efficient counterfeiter.

Leopold B Scotch says

I addressed each of your points, some more directly than others. You just don't fully comprehend what I'm getting at through your neo-Keynesian, Red-Tinted Glasses.

OK--let me try again. Before I write a long post, let's get your position clear.

You claim that the problem is too much consumption and not enough investment right?

OK--I changed my mind. I will address your points.

Leopold B Scotch says

There are many reasons cash is sitting idle right now. They include (but are not limited to):

Leopold B Scotch says

1. The last time folks had tons of cash (thanks also to artificially low interest rates, thanks to Greenspan's intervention, the entire economy restructured around those rates and how they flowed through the credit system and into housing and real estate. This was exacerbated by A) legislation requiring lenders to lend to one and all regardless of actual qualification B) such readily available money corrupting both the credit and housing markets with get-rich-quick, F-All bubble mentality.

That's a long paragraph that didn't answer your own question.

Leopold B Scotch says

2) Smart business people see monetary intervention and policy stimulus as one off, temporary events, and are therefore reticent to make the same mistake pending a more organic, self-sustaining (non bailout dependent) recovery to emerge.

So, what your saying is that "smart" business people don't trust the recovery. Probably because they know that income inequality is near all time highs. And they are afraid that consumption will go away. (they agree with my thinking)

Leopold B Scotch says

3) The unit of account (our currency) is highly corrupted and unreliable as is reflected in the ever-increasing volatility as market participants struggle to make heads or tails of proper market pricing. But the pricing mechanism of the market is n breakdown mode, and those with capital hold tight.

Currency has been volatile for a long time. That doesn't stop people from investing. It might change where they invest, but it certainly wouldn't cause they to just hold dollars. That would be the worst possible investment in an inflationary environment. So, that is just plain wrong.

You had the right answer, but your dogma rejects it for some reason.

Leopold B Scotch says

if only we uproot those stores of savings and send it into the hands of those who will consume it, we'll all be better off.

Ding, ding, ding. We have a winner.

tatupu70 says

Leopold B Scotch says

if only we uproot those stores of savings and send it into the hands of those who will consume it, we'll all be better off.

Ding, ding, ding. We have a winner.

Yikes.. the same old Keynesian baloney that's been grinding the world's economies into the ditch for decades? Slowly but surely? That theory embraced only by beneficiaries of big government?

Tatupu's prescription for a healthful recovery is yet a heavier dose of the very pathogen that's caused the problems in the first place.

That's the point about economic seed-corn in my first comment to you that you've now ignored (or don't understand) multiple times.

Such redistributive policies help its beneficiaries feel good until the day the real savings (the economic seed corn) of the economy are too shallow to support the burden, and the system collapses in economic famine.

Of course, if you're like Tatupu70, and can't tell the difference between paper currency (of which there is plenty sloshing around) and actual wealth-creation, well... you'll just be tone deaf to reality. So long as more units of currency slosh around and redirect wealth, that's good. So, I suppose you support a Krugmanesque recipe of having the Fed print yet more money out of thin air and dumping it into the economy, so to allow for wealth to be leeched from savers and into the hands of spenders?

Never mind that such policy merely erodes the collective standard of living by destroying the very engines that create wealth?

It's like trying to get a steam ship to motor faster across the ocean by ripping planks of wood for the furnace from the bottom hull.

Keynesian has never been anything more than a form of economic cannibalism. It's like eating a part of your own leg so you have the energy to run faster.

tatupu70 says

Leopold B Scotch says

I addressed each of your points, some more directly than others. You just don't fully comprehend what I'm getting at through your neo-Keynesian, Red-Tinted Glasses.

OK--let me try again. Before I write a long post, let's get your position clear.

You claim that the problem is too much consumption and not enough investment right?

I wish I'd seen this first. I appreciate that you are asking for clarification.

Not really. I don't look at this purely through the lens of Keynesian consumption or investment.

The problem is that policies so far, and those espoused by the likes of Krugman, are counterproductive to capital formation and the associated improvements in the standard of living of those in said economy.

A consumption-first policy is a cart-before-the-horse approach to growing wealth.

Inflated and Falling Houses says

MoneySheep says

The truth is you build wealth by hanging on to houses for decades

Not true at all.

The longer you hold onto a depreciating asset, the greater your losses.

That's only true if the asset isn't providing a service or earning income. If you hold onto and drive a depreciating car for 30 yrs, you will be better off financially then buying a new one (to drive) every yr. If you buy a house and live in it for 30 yrs, you will typically be better off than if you (1) rented for 30 yrs or (2) bought and sold a house every other year for 30 yrs.

Leopold B Scotch says

Not really. I don't look at this purely through the lens of Keynesian consumption or investment.

Good. Neither do I.

Leopold B Scotch says

The problem is that policies so far, and those espoused by the likes of Krugman, are counterproductive to capital formation and the associated improvements in the standard of living of those in said economy.

Could you be more specific? To which policies do you refer?

Leopold B Scotch says

A consumption-first policy is a cart-before-the-horse approach to growing wealth.

I'm not sure what you mean here. There is no universal prescription for healing an economy--it depends on what the disease is. Keynesians understand this. When lack of consumption is the problem, then policies to encourage consumption should be undertaken. When lack of investment is the problem, then policies that encourage investment should be undertaken.

To be clear--I think lack of consumption is the problem now. Low interest rates, high unemployment, very low growth, etc. are why I think this.

If we had high inflation, high growth, low unemployment, then I would argue we need less consumption and more investment. Which is why you see higher interest rates during those periods--to encourage investment.

Leopold B Scotch says

Tatupu's prescription for a healthful recovery is yet a heavier dose of the very pathogen that's caused the problems in the first place.

Wrong--I don't want larger income and wealth disparity. That is what has caused the problems. Out of curiosity, what is the pathogen in your mind? How has it caused the problems?

Leopold B Scotch says

It's like trying to get a steam ship to motor faster across the ocean by ripping planks of wood for the furnace from the bottom hull.

How about you forget the analogies. They serve no purpose and are very poor.

I thought that before the FHA in the 1930's that the typical mortgage terms were a 50% down payment and paid off in 5 years.

Actually I think we should move to a 40 year mortgage minimum. That way banks can suck the blood of home debtors for even longer and in many cases until they die, then take the house anyway after gorging on interest payments. Of course they already do that now a lot of the time.

tatupu70 says

Leopold B Scotch says

Tatupu's prescription for a healthful recovery is yet a heavier dose of the very pathogen that's caused the problems in the first place.

Wrong--I don't want larger income and wealth disparity. That is what has caused the problems.

Well, there is a difference of view re cause and effect. Income and wealth disparity is a matter of current fact. This disparity is also exacerbated by some factors / actions, improved by others. I would argue that it will always be an economic reality, and in and of itself is not a measure of overall economic health. (e.g., would folks mind if the least wealthy had the current living standards of a present-day the millionaire that some have $ billions? Surely, some would.) But wealth disparity unto itself, IMO, is not primary problem or cause. That it may be a negative currently is more a symptom of the primary problem.

Out of curiosity, what is the pathogen in your mind?

Nearly 100 years of constantly increasing amounts of centrally planned, activist economic interventionism.

How has it caused the problems?

There are so many subsets, where does one begin?

Primarily I would say that through a myriad of policies, we've derailed the process of wealth / capital formation / creation, because our broader policy initiatives engage in primarily the rearrangement and consumption of existing economic wealth rather than towards the creation of additional wealth. In doing so, it both negatively stuns the upward trajectory in the broader improvements of standards of living, while simultaneously exhausting the existing supply of capital upon which the economy relies to for future improvement.

It derails the time preferences of economic actors, shifting wealth from those who are generating an improvement in overall standards of living to those who are increasingly more purely consumptive in their handling of wealth. It shifts wealth from longer term projects to immediate gratification type projects. It punishes long time horizons to the benefit of short time preferences. While it serves the short-term / populist goal of fast-forwarding a narrowing of the gap in income disparity, it ultimately reduces the overall, on-average standard-of-living growth trajectory for the economy as a whole.

Worse yet, tallowing for such policies enables looting of the wealth for the benefit of special interests, corporatism / parasitic capitalism by providing a strong, centralized government that can be hijacked by special the powers that be for their own benefits. Happens either directly through government contracts / graft, or less directly (and more destructively) through (normally) steady (and sometimes rapid) devaluation / expansion of the currency, directly through monetization, or less directly, through the ever-expanding credit markets. Either way, rather than spreading the wealth, as we see currently, Wall Street gets mega bonuses, mega corporations earn mega profits for their bigwigs, and Washington D.C. and all the feeders at the trough feel massive economic growth and success while the rest of the nation suffers in a full fledged depression while they prosper, netting out a GDP that is tepid growth on average.

Leopold B Scotch says

It's like trying to get a steam ship to motor faster across the ocean by ripping planks of wood for the furnace from the bottom hull.

How about you forget the analogies. They serve no purpose and are very poor.

But this is the subject of chapters in books, difficult to articulate through a concise forum post that open all sorts of doors. I'll grant you the two analogies (the ship and leg ones) were a bit much in my last post, but I stick with the economic seed-corn analogy because so many seem to be capable of seeing economic relationship to squandering the stores of seed-corn with capital formation and the benefits thereof. I've added the ship and leg ones to try to communicate in the most simple terms with you since, so far, with the seed-corn analogy, you've been the lone exception to not "get it".

Perhaps your own dogmatic blinders prevent you from getting it? (Which, BTW, claiming someone else's points are "dogma" as you tried above in order to invalidate them is a weak, straw-man argument. You have an ax to grind with your view / your own dogma, and I have my own view, dogma, whatever. Whoop-dee-doo. To turn your own words back at you, such red-herrings "serve no purpose and are very poor" approaches to discourse.)

Leopold B Scotch says

Perhaps your own dogmatic blinders prevent you from getting it? (Which, BTW, claiming someone else's points are "dogma" as you tried above in order to invalidate them is a weak, straw-man argument. You have an ax to grind with your view / your own dogma, and I have my own view, dogma, whatever. Whoop-dee-doo. To turn your own words back at you, such red-herrings "serve no purpose and are very poor" approaches to discourse.)

I agree. I did it mainly to show that while you claim dogma blinds me, if anyone is guilty it is you.

Leopold B Scotch says

I would argue that it will always be an economic reality, and in and of itself is not a measure of overall economic health.

History will again disagree with you. Wealth disparity rises and falls along with the economic environment at the time. Look at the 50/60s in the US. Compare that to the 20s and present day.

Leopold B Scotch says

But wealth disparity unto itself, IMO, is not primary problem or cause.

Well--I disagree strongly. It is THE most important problem.

If I can summarize the remainder of your post, you think inflation causes people to make poor decisions by valuing short term gains over long term gains. Is that correct?

Do you have any examples? Supporting evidence?

The paragraph about special interests I think is completely off base. I don't see how inflation causes any of the things you attribute.

tatupu70 says

Could you be more specific? To which policies do you refer?

Too many to list. Interventionism, activist or otherwise, in the economy from the state or its agents at the central bank. Examples -- At a higher level: Greenspan's work to short-circuit and redirect the recession and correction of 2000-2002. At a more granular level: policies from government designed to get everyone into a home regardless of home affordability or borrower solvency, demanded by legislation and financed by vast credit expansion. ETC.

Leopold B Scotch says

A consumption-first policy is a cart-before-the-horse approach to growing wealth.

I'm not sure what you mean here. There is no universal prescription for healing an economy--it depends on what the disease is. Keynesians understand this. When lack of consumption is the problem, then policies to encourage consumption should be undertaken. When lack of investment is the problem, then policies that encourage investment should be undertaken.

To be clear--I think lack of consumption is the problem now. Low interest rates, high unemployment, very low growth, etc. are why I think this.

In all seriousness: Why ? How can you know?

If we had high inflation, high growth, low unemployment, then I would argue we need less consumption and more investment. Which is why you see higher interest rates during those periods--to encourage investment.

Again, Why? How? Especially when the interest rate environment is nowhere close to a natural market rate with the massive amounts of manipulation that policy makers engage in and/or the system encourages directly through a backdrop of uber-credit accommodation?

I think trying to centrally plan this all is folly. Markets have billions of participants exchanging information, working to most efficiently distribute resources in a constantly recalibrating value exchange. Interventions short-circuits this process, degrading it. On top of the seed corn problem that all of this enables, as well as the fact that our system is invariably coopted to redirect wealth from the average guy to the most politically powerful. Such is the bedfellow, even if unwelcome, of even the most well-intended socialist aspirations because the tool of socialism is always government force.

I am interested in the why's and how's above.