[snidane]

> Land is hardly a major category of economic value

1. Real estate market is by far the largest market out there. 99% of people worldwide are involved in it with 10x leverage over their net worth or up to 50% of their paycheck.

Real estate is THE market where excess money ends up. It is the sink in the graph of money flows.

2. Real estate values are not created by buildings but by land values.

  - as brokers say, the value of property depends on 3 things: location, location, location
  - the actual price of buildings goes down to zero over a generation or so, or even below zero accounting for demolition costs for the next parcel tenant. See Japan
  - the inflation of real estate over last 2 decades has been 100s of percent, while inflation of labor has been at most in 1s or 10s of percent
  - a building can cost as much as 10x in a metropolis compared to the same building in a small town. Construction labor (imported from out of the country typically) and materials are extremely mobile, so the actual building doesn't explain the price difference. It is determined by land purely.

So no, land has always been and still is the largest market out there, the largest monopoly existing and the classical economists were right to include it as a factor of production alongside labor and capital, and modern neoclassical economics is completely wrong for ignoring the largest market in the world by a huge margin.

[jl2718]

Sorry, I meant passive investment asset. You are correct in saying it is the primary economic value, but almost always active.

Government bonds are a special category though. They are the only asset other than gold certificates accepted by the federal reserve as collateral for issuance of legal tender.