[medellin]

Yes and it also penalizes people who want to plan ahead and save. At 10% inflation year over year what is the point in saving for a nice house that might take you 8 years to save up for.

What you describe benefits people who overextended themselves and got lucky. Not really the thing i care about encouraging

[high_priest]

Well, you can look at it from the opposite perspective. In an ever inflating economy, why 'save' when you can do literally the same thing by taking a loan, getting the thing now and paying for it over time? Both perspectives include risk where you don't get the thing' because you don't create enough capital in time. So why bother waiting, when you can get that thing now?

[s1artibartfast]

>In an ever inflating economy, why 'save' when you can do literally the same thing by taking a loan, getting the thing now and paying for it over time?

Because you cant get a loan. Lending is much more risky if the borrower doesn't have a down payment and their current income is meaningless in comparison to the loan interest compounded over 10-30 years.

Edit: another fact to consider is that in an economy where your only option is to borrow, you pay a premium to the lender and have no option

[ephbit]

The key assumption here is (for me):

> In an ever inflating economy, ...

Inflating the economy has been working over the course of the last century or even longer.

What many people appear to be oblivious of is that this growth has been fundamentally based upon a few factors: (a) very useful innovations in science/technology, (b) population growth and (c) almost limitless and thus cheap fossil energy in combination with ecosystems as basically humanity's landfill for all the waste streams of our ignorant and half-assed make-a-quick-buck-products.

(a) may very well continue delivering efficiency/productivity gains over decades to come or forever.

(b) and especially (c) are hitting ceilings right now.

I think this "ever inflating economy" has only been possible without much more frequent financial collapses because there was all this extra potential for use/misuse of natural resources available. This is what kept filling in actual consumable value/goods for all the inflated $.

With this extra potential becoming smaller and used up I very much doubt the current economic model can be kept running for more than another 15-20 years.

And with modern monetary theory MMT economists enticing politicians and naive optimists with their "yes, there is free lunch for everyone, don't you all worry about running deficits" message, the whole economic system is set up for hitting the ecological limits with the foot still on the accelerator.

[civilitty]

> What you describe benefits people who overextended themselves and got lucky. Not really the thing i care about encouraging

What he describes is risk taking which is generally praised here.

[medellin]

It could be considered risk taking. But there is a line between risk taking and stupidity. And true without more context it’s hard to decide here.

However risk taking on housing has historically turned out bad for individuals and the economy

[civilitty]

> However risk taking on housing has historically turned out bad for individuals and the economy

What are you basing that on? The GFC may be the most recent major crisis but home ownership is the American dream post-WWII.

[mikem170]

The American Dream ain't what it used to be...

Post-WWII a guy without a high school education was able to get a job at the steel plant, buy a house, raise a family, buy a rental in Florida, and retire with a pension.

The post-WWII U.S. economy was an anomaly - having half the worlds GDP. So many other industrialized countries were bombed and needed to rebuild. The U.S. was the factory of the world for a couple/few decades. We had security, capital, demographics, and productivity gains all in our favor during that time.

We no longer live in that economy. Members of today's millennial generation struggle to save for housing while paying down student loans. Many are still living with their parents. For those who want to have kinds it is common that both parents need to work. Wages have been stagnant for several decades. The government has subsidized 30 year fixed rate low interest mortgages, and the accumulated asset wealth this realized has benefited older generations, making housing much harder to afford for everyone else, a greater multiple of their incomes. Younger generations don't expect to do better than their parents. Maybe this explains the rise in populism. Is this sustainable? Can housing keep increasing in value? Or do we need to make changes?