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Homeboy
2014 Jul 23, 6:18am
And, I don't see a mechanism despite all the crony nonsense that is spewed here.
You don't believe being able to borrow as much money as you like at effectively zero interest, and invest that borrowed money, is a mechanism to increase wealth?
I don't think that's the only way wealth disparity increases - lowering the capital gains tax is another obvious one. But I think it is one way, and you seem to completely dismiss it out of hand.
Why do you say "crony nonsense"? It's a fact that wealthy members of the investor class move freely from key Wall Street positions to government positions and back again to Wall Street, and have a huge amount of influence on government monetary policy. Tell me what exactly is "nonsense" about that.
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The bay area market went up a quite a lot and because of low interest rate houses are selling for very high price. For ex - A house which was selling for $650k might be selling for $800k now because of interest rate. If the interest rate goes up then most likely home price will go down. If house prices goes down then the people who bought at higher price will see home equity shrinking or negative home equity. This will put lot of downward pressure.
Is this thinking wrong ? Let assume all other factors are same - employment, flat wage, etc