[lotsofpulp]

> The problem is that it gets harder and harder for normal people to own anything (build up wealth),

In the US, it is easier than ever. Open a free account online at a number of brokerages, and buy some broad market low cost equity index ETF.

The problem is government subsidies for real estate. Get rid of federal taxpayer guaranteed mortgages (Fannie Mae, Freddie Mac, ginnie mae). Get rid of 1031 exchanges. Let the markets set the interest rate and do its own risk calculations.

See similar price distortions due to federal taxpayer guaranteed student loans.

All of this is unlikely, however, since the US and many other societies have baked in burgeoning economic growth for decades to come in their previous decades’ spending. Therefore, to avoid defaulting on these assumptions, the societies will keep inflating currency to keep the ruse going as long as possible.

[turbinerneiter]

It's just that most people would prefer owning a house over owning stocks.

Because when the economy tanks and you lose your job, you have to sell your stocks at the low point to make rent. When you own your house, losing your job still sucks, but at least you still have a home. Thats also the reason why the low interest rates, although nice for homebuyers, also aren't a great levy of the situation: I have to pay back the credit for my house over 40 years, I have the same risk of losing everything in a downturn. You can't make the credit payment and are forced to sell your home at the market low.

Maybe I'm just traumatized. When I left school, 2008 economy crash was in full swing, two years after leaving Uni and in my first job, Corona happened.

On the topic of price distortions through government influenced loan rates: I think what you say makes sense.

[lotsofpulp]

I do not understand your comment, as it started off sounding like there was a downside of renting vs owning, but then later on in the paragraph, you say that the risks of not being able to pay rent and not being able to pay a mortgage result in the same consequences during an economic downturn.

> Because when the economy tanks and you lose your job, you have to sell your stocks at the low point to make rent.

You should have an emergency fund so that you do not have to sell at the low point. I try to keep at least 24 months of expenses.

In the US, the government also offers a federal taxpayer subsidy in the form of lending people money with no money down or 5% down or some ridiculous scheme advertised as helping lower income people. On the contrary, this simply increases home prices and over leverages them since they will barely make monthly payments and any hiccup will derail them.

[turbinerneiter]

I do think renting has a downside compared to owning, but that due to the high prices and resulting very long timespans of paying back credits, buying is getting riskier.

Owning has lower risk than renting, but you have to buy to own and when you can't buy outright, then there is a phase where you are still exposed to a risk of losing your home.

And keeping 24 months of expense is a good idea, but if I want to buy a house, I want to put down as much as possible. 24 months of expenses is about 80% of my savings. And the majority of people do not have any kind of savings at all.

[stavros]

Even my low-risk Vanguard ETFs have gone up like 30% in a year. That seems insane to me.

[lotsofpulp]

I would expect that. Politically, everyone is aligned with ensuring equity prices go up. And so everything possible will be done to accomplish it.

I am 100% equities for any funds I do not need in the next few years. Index fund ETFs are the real TIPS, Treasury Inflation-Protected Securities.