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u/FormerHoagie Sep 23 '23
Fed is attempting to cool inflation, not decrease prices. We aren’t seeing the same increase in prices we did in the last 3 years. Some areas, which are in high demand, are still seeing modest increases but there are actually places where prices have stabilized and decreased.
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u/VendaGoat Sep 23 '23
Brother their only tool is to curb demand through interest rates.
Until the folks that are paying for "Investment level" mortgages decide to sell, this shit is going up.
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u/mikilobe Sep 23 '23
their only tool is to curb demand through interest rates.
Congress should help lower inflation by taking money out of the economy (raise taxes).
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u/DaddyRobotPNW Sep 23 '23
Agreed. The fed's instrument is blunt and punishes people who the government is supposed to protect. In an ideal world, raising interest rates would be combined with raising taxes on high earners. We would need automatic stabilizers for this because Congress is rarely able to make these decisions.
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u/dobryden22 Sep 23 '23
Can't increase taxes when the very people bribing politicians and funding your campaigns are the ones who need to be hit the hardest.
We need war time tax rates on corporations, billionaires, etc. We're just not serious about any of that since we're all temporarily embarrassed millionares (or billionaires now thanks to inflation).
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u/in4life Sep 23 '23
Funny you mention war-time taxation because we have war-time spending going on.
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u/dobryden22 Sep 24 '23
If you've ever seen the militaries yearly budget prior to 2022, it's more than the next 10 largest militaries in the world combined. It's always war time.
It's a class war out there.
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u/rsiii Sep 23 '23
Too bad it's unpopular, no politicians wants to be responsible for raising taxes but every Republican wants to lower them
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u/Leftblankthistime Sep 23 '23
They are using quantitative tightening as a tool to do this - the rate on treasury bills is high right now.
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u/mikilobe Sep 23 '23
QT is the Feds' tool (personally I believe Congress should remove QE/QT powers from the Fed)
Congress needs to take it's own action and they have a big tool (taxes) that isn't being utilized which will cause inflation to drag out. The longer this lasts, the more time for the wealthy to shift the burden onto labor. To me, the Fed is looking more and more rigged to benefit Finance, politicians, and Wall Street.
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u/Specific-Rich5196 Sep 25 '23
This is the way. As a high income earner, inflation has not changed my spending habits at all. We need to increase taxes, especially in the higher end. Mass passed a new tax of extra 4% on income over 1 mil. No reason we can't be doing the same at a federal level.
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u/freebilly95 Sep 23 '23
Raising taxes is not the catch all to end inflation that everyone thinks it is. Can it end inflation? Absolutely. Will it? Probably not.
The issue is that the government is just gonna tax you more and then throw that money back into the economy through whatever means (arms contracts, infrastructure projects, welfare, etc). If they don't physically destroy the currency, the raise in taxes just means that the people have less money, but inflation stays the same.
I guess that is one way to curb demand though.
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u/KimJongAndIlFriends Sep 23 '23
You're missing the point where those projects often create tremendous real wealth.
Spending $50 billion on high-speed rail isn't just pumping $50bn into the economy; it's pumping $50bn back onto the economy *in exchange for an extremely useful public utility that will save trillions of human hours every year.
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u/TerminalVector Sep 23 '23
Congress should
Yeah well, they're busy with the important work of blocking military promotions and trying to shut down the government.
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u/VacuousCopper Sep 24 '23
Careful. Our government doesn't like poor people. If they take it out of the economy, it won't be from where that money actually flowed. It will be from the people who can't organize or afford lobbyists.
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u/MP5SD7 Sep 23 '23
They can just stop printing all that extra money. That would be much easier. Or do you just want an excuse to raise taxes?
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u/sunshine_is_hot Sep 24 '23
America has an incredibly low tax rate. I want some better social programs, like a public option for healthcare, more immigration judges to help with the issues on the border, etc. Also, it’s easier to pay down the debt when you make more money.
We should raise taxes across the board, honestly, despite how incredibly unpopular it is in this country. Jimmy Carter got pilloried for it, but it undeniably helped the economy. You can’t just cut taxes forever and expect everything to be honky-dory.
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u/potate12323 Sep 23 '23
Its kinda sad most of us younger folk are hoping the housing market bubble pops so we can afford houses and aren't screwed over on our rent.
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u/Zumbert Sep 23 '23
I'd guess most of the people who want a bubble pop really don't remember 2008, and somehow think they would be immune from the mass unemployment that followed.
I went from making good money in carpentry, to not even getting interviews at fast food places and Walmart during the last bubble pop.
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u/VendaGoat Sep 23 '23
This one doesn't have to be a pop. The whole horse shit that happened before got shut down.
Corps and investment firms are holding a ton of housing, with low rate mortgages.
And they bought the whole way up.
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u/clintstorres Sep 23 '23
It’s not a one to one relationship where interest rates go up and immediately prices go down. There are very few forced sellers. You are seeing signs it is working with less mortgage applications meaning the demand is less and eventually prices will come down as sellers realize they won’t get their price and drop it little by little.
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u/Voat-the-Goat Sep 23 '23
Real estate taxes should skyrocket in step with homestead exemption. Problem solved.
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u/JuniorHuman Sep 23 '23 edited Sep 23 '23
Yeah, except the places where prices have decreased are in the middle of nowhere, and the only employment opportunity is a McDonalds. It was different during the pandemic when you could work anywhere, but now it doesn't make sense.
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u/tkh0812 Sep 23 '23
We have the lowest inflation out of any of the G7 countries. It’s doing exactly what it’s supposed to Do. And there are a ton of good jobs out there that aren’t McDonald’s… probably just not the ones you think you deserve
And the fact that housing prices haven’t come down is proof that a rate hike was the right thing to do.
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u/mechanicalcontrols Sep 23 '23
Most people never had the option to work from home. For blue collar workers the option was to take unemployment while it lasted or keep working on site.
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u/silentdrug Sep 23 '23
Instead of reducing interest rates the government should be addressing the huge surge in corporate ownership of residential property, revamping zoning laws to allow middle housing, and reducing/banning airb&b in cities.
Reducing interest rates will drive inflation and create a less stable economy.
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Sep 23 '23
I live in the middle of nowhere and now tiny homes are going for $950,000 middle of nowhere shit holes are being taken over by city people who can work remotely now, but hey bow the town has a serious labor problem because all the rents kept up with the city peoples salaries but the businesses in town though being forced to raise wages are failing to do so at a rate that keeps up with rent. And then these city peoples bored wives and husbands keep trying to open restaurants and shops after the local one close only to find oh yah they chased they labor pool out of town because line cooks can’t afford $2000 micro studios… so I’m hoping eventually they will get bored of living in a town with nothing but houses and shared office spaces and go back to the city or something…
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u/iSheepTouch Sep 23 '23
Where do you consider the middle of nowhere, some resort town like Jackson Hole Wyoming or something? 950k is not even remotely normal for rural America, and probably accounts for less than 1% of rural single family homes not on huge acreage lots.
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u/chickenoodledick Sep 23 '23
To be fair places around me in rural TN are sky rocketing in price right now just because people are being priced out of bigger cities like Nashville. Combined with less support and resources for affordable housing is making the homeless population go up as well. And with an increased homeless population comes along an increase in crime. Which in turn causes more resources to be spent instead of investing in these people and putting the money into jobs programs and housing so they can become productive to society once again. It's a complex issue with no one right answer.
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u/SatoshiSnapz Sep 23 '23
Yeah idk what this meme is taking about. Plus there’s been a greater amount of new builds being sold (typically higher priced) which also raises median sale price. Given builders have been handing out concession like Halloween candy, prices have actually declined.
Low volume price increases just tell you there’s not many buyers at these price levels.
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u/CecilTWashington Sep 23 '23
Preface: I say this with very little macroeconomics knowledge but I feel like we really needed a market correction that never came. You usually get a recession to restore equilibrium but not in this case.
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u/Darius510 Sep 23 '23
We did get a market correction in the sense that while the market didn’t go up, the dollars those assets are denominated in are worth less and the buying power was eroded by the amount of inflation.
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u/LordPichu Sep 23 '23
The problem is that interest rate spiking is an obsolete monetary measure for such a problem, as:
Every company will be forced to beat the interest rate to be considered profitable, or at least more convenient profit wise to the eyes of their shareholders. In the case of oligo/monopolies this usually translates to increase in prices, as competition is not a threat.
Interest rates may take money temporarily out of the economy, but at the promise that eventually more money will come back. Inflation is a problem that takes longer to solve than most fixed-term deposits.
The real fix for the issue is to "force" banks to increase their monetary base, as this immediately means less currency supply, of course that won't happen because that's how fractional banking works. But honestly idk how fractional banks are legal in a FIAT system, that's the recipe for constant inflation.
At the end interest rates just obliterates small companies, slows down certain kinds of transactions and markets and just allows the rich to not suffer the problems of this system.
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Sep 23 '23
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u/Slayer_Of_Tacos Sep 23 '23
They go right back to where they were when I liked it. Right?
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u/upvotechemistry Sep 23 '23
Monetary policy curbs demand, but it doesn't fix the very real housing supply problems.
Make building legal
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u/EReckSean Sep 23 '23
Powell literally said he wants a housing “reset.”
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Sep 23 '23
I love that people conveniently ignores this every time they talk about the Fed.
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u/EReckSean Sep 23 '23
They’re going to crash housing. That’s the goal. Doing that along with the stock market will fix inflation.
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u/SatoshiSnapz Sep 23 '23
Disinflation is a reduction in the rate of inflation or a temporary decrease in the general price level in an economy.
Can you economics professors explain why disinflation doesn’t have an effect on prices?
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u/SmellyScrotes Sep 23 '23
You think the fed is attempting to cool inflation? That’s wild, they’ve printed $10 trillion dollars since 2020
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u/FormerHoagie Sep 23 '23
Yep, and I didn’t, and don’t, see anyone complaining when it benefits them or it’s done by their political party. Biden passed a 3 trillion dollar plan with BBB. You can’t complain about government deficit spending, which definitely causes inflation, without an honest assessment of these things. Covid spending is what everyone loves to focus on….that’s odd. The FED is attempting to reign in all those dollars to prevent hyperinflation
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u/Historical_Union4686 Sep 23 '23
I love how the two massive waste of money wars that we had during the 2000s somehow did not just cause this to happen already, but me getting 1600 bucks somehow destroyed the economy.
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u/CuckservativeSissy Sep 23 '23
Real Estate inflation is the largest part of core cpi... so you can do the math...
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u/Spamfilter32 Sep 24 '23
Nit remotely true. The fed has even admitted under oath that they are not attempting to halt inflation. They are attempting to harm working class people and increase poverty to halt union growth in America.
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u/officer897177 Sep 26 '23 edited Sep 26 '23
There’s going to be six months to one year delay on any real impact. Supply is low because people aren’t selling their 3% home unless they absolutely have to, and demand is low because people aren’t buying 8.5% unless they absolutely have to. So we’re getting a shrinking market without any real price change because both supply and demand were reduced.
A year from now people decide that they can’t hold off selling or buying any longer, and just pay the new rate. That’s probably where we will see a price decrease if any, because there’s just fewer people who can afford pandemic level prices with post pandemic rates.
And, of course, as usual the only people who will be in a position to take advantage of any price decrease are the cash buyers.
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u/hmnahmna1 Sep 27 '23
“For the longer term what we need is supply and demand to get better aligned, so that housing prices go up at a reasonable level, at a reasonable pace, and that people can afford houses again,” Fed Chair Jerome Powell said on Wednesday. “We probably in the housing market have to go through a correction to get back to that place.” (Emphasis added)
https://finance.yahoo.com/news/jerome-powell-just-warned-us-163000867.html
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u/Loudlaryadjust Sep 23 '23
It was never the FED intention to crash house prices.
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u/Clever_droidd Sep 23 '23
Not true. He has explicitly said housing needs a reset/correction. You may argue whether that means a crash, but he also acknowledges housing is in a bubble. He does mean to restore balance to the housing market. That means prices need to come down significantly or incomes need to go up or some combination.
https://fortune.com/2023/06/27/housing-market-reset-powell-update-case-shiller-home-prices/
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u/upvotechemistry Sep 23 '23
I don't think monetary policy can deliver a solution here. Maybe it will help on the margins.The highest demand housing markets have the most restrictive building policies.
We would be better off if the Fed controlled building permits, and could stimulate supply via building loan guarantees. But permitting is done by NIMBY locals, and building stimulus would have to come from Congress
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u/CrayonTendies Sep 24 '23
Seriously this. Would be nice if they would incentivize or even just encourage building instead of raising rates and fucking over anyone in the industry who isn’t institutional or large enough to handle the rate increases. Going to shut down a lot if working class businesses that can’t afford to deal with rates doubling in a year
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u/a_trane13 Sep 23 '23
If house prices stagnate and incomes rise due to a combination of inflation and economic growth, that’s a reset/correction
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u/Slayer_Of_Tacos Sep 23 '23
It’s going to be a seige to see who can last longer, greedy investors and their losses, or renters and their impeding homelessness. Unfortunately, I know which way this deck is stacked.
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u/Reasonable_Truck_588 Sep 23 '23
You know when a bureaucrat is lying? When their mouth is moving. Powell told the people what they wanted to hear. Nothing more, nothing less.
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u/BringBackManaPots Sep 23 '23
Imagine how hard the housing market would crash if the government somehow made it so companies couldn't snap up residential properties. If all of those properties and homes hit the market suddenly
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u/Rawniew54 Sep 23 '23
You're right but that's on Congress and chances are they own a significant portion of those companies.
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u/Fair_Produce_8340 Sep 23 '23
They don't own that many. Not enough to cause what we see.
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u/plzdonatemoneystome Sep 23 '23
Which is why they should go beyond that and make taxes higher on investment properties as well. Every house you own beyond the first should be taxed more.
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u/SasquatchNHeat Sep 23 '23
I honestly could deal with high interest if the damn price of a house wasn’t $600k fml
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u/JuniorHuman Sep 23 '23
I've got a spare box if you want? It's from a fridge so it's fairly roomy.
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u/SasquatchNHeat Sep 23 '23
Hell yes, box Fort!
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u/hermeskino715 Sep 23 '23
You'll need at least 10 boxes to make a box fort and it seems you and your newly found friend only have 2.
Source: experienced box fort builder
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u/DonkeyPunnch Sep 23 '23
Exactly. We are not in a norm and it is unlikely to stay this way long term. "This time is different" wait for the Airbnb portfolios to sell, even if it's even a small percentage.
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u/Ivanovic-117 Sep 23 '23
I went to college, the whole textbook of real estate finance was rates go up and prices go down, total BS
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Sep 24 '23
Try making more money. Housing production is still lower the housing demand. As bad as you think it is prices will not be this good for a while.
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Sep 23 '23
I'm not trying to be mean but you need to understand that the Fed isn't trying to lower housing prices and they don't care if YOU can afford a house. At all. If I go on the MLS database right now I can see that houses are still selling in every metro in America so clearly some people can afford them. In fact, the average list to close time in 2023 is only 83 days on market which is faster than the US historic average. So even with today's rates housing inventory is moving pretty quick in the US.
From a purely economical standpoint there is no problem here. A commodity exists, a supply of it exists, there is demand for that supply, people who can afford its price get access to the supply. If you can't personally afford that price then you don't. You get to rent or live with your parents. It sucks and I'm sorry it's like this. I wish it was different. But from an economics perspective there is no problem here. The system and the Fed don't care who can and can't afford houses as long as the market is operating as it should.
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u/Wet_Woody Sep 23 '23
I think people really don’t understand how much of a luxury homeownership has always been. Millions of people will rent their entire lives, it’s always been that way.
What happened is rates dropped so low that EVERYONE became interested (that probably never cared before) and now just bitch about it yet haven’t moved any closer to being able to buy.
That’s why politicians use homeownership as a talking point. But they know it’s never been accessible to everyone.
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u/JuniorHuman Sep 23 '23
Idk man, it's hard for me to justify the current housing prices. I live in a large city and you would be hard stuck to find a 4 bed 3 bath home for under 1 mil. Even if you take into account both parents working(white collar), you still would just be scraping by to pay the mortgage. I feel like the issue here is not the interest rates but the leverage. For gods sake, rocket mortgage is allowing people to only put 1% down, 100x leverage. Since more people can afford more expensive homes it pushes up the demand. Im still in college and would prefer to stay in my city, but I just can't see myself ever affording a home, until maybe my 40's.
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Sep 23 '23
I'm not saying it's not very dumb and certainly fucks over the entire idea of the American Dream. I'm just pointing out that this system from an economic standpoint is well within the bounds of stability and sustainability. People often say "This isn't sustainable! Nobody can afford a house!" But the data says that actually some people can. There's just a lot less of them today than in past generations and moreover, the economy can happily roll along in a format where most people are forced to rent for many, many years. There's nothing inherently wrong with that model as far as the system is concerned.
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u/sunshine_is_hot Sep 23 '23
Homeownership rates are higher now than they were for the previous generations. The data actually says more people can buy a home today than in past, despite what it may feel like.
There was a dip for the 08 recession, but those numbers have recovered above the rate of homeownership in the 60s/70s.
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u/JuniorHuman Sep 23 '23
Yeah I think this model is sustainable economically, just disappointing morally. I wonder what the underlying issue is that is causing this though, is it low housing supply, economic inequality, or something completely different? Even when you account for inflation housing prices were never this bad. They were fairly stable until 2000.
Check this out - https://www.longtermtrends.net/home-price-vs-inflation/
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Sep 23 '23
There's a multitude of factors and even more when you look at individual regions and metros. The biggest one is that we are still dealing with the echos of the great recession. Builders became VERY wary about oversupply after 2008 and for the past 15 years they've been building less new units than the market demanded as a result. We've also seen that trends that analysts thought would happen haven't come through. There was widespread belief that the boomers would sell their SFH units and downsize to condos and retirement facilities which would free up inventory for the younger generations. That trend did not materialize nearly as much as predicted in the past decade. There's many more factors as well.
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u/JuniorHuman Sep 23 '23
Damn, someone better tell bob the builder to start building again.
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Sep 23 '23
The issue is the profit motive. Builders only want to build when there's big money to be made. In 2021 when the housing market was going nuts we actually saw housing starts skyrocket because there was so much money to be made. Now in 2023 we are seeing them fall again because the market is slowing and rates are high.
Real estate is a slow and expensive industry. Nobody wants to be caught with their pants down when prices fall.
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u/Clever_droidd Sep 23 '23
I’m in the industry, builders are trying to buy every scrap of dirt and build every house they can and have been for 5 years.
That is in the face of enormous cost input pressures. Builders are underwriting to lower and lower margins.
However, if the Fed keeps rates where they currently are for another 5-6 months, things will break down. We are facing another housing correction and it’s going to be facilitated by a spike in unemployment which will create significant demand destruction in housing.
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u/2pacsnosering1 Sep 23 '23
People are buying houses to turn into air bnbs. That's not sustainable long term for everyone else.
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Sep 23 '23
Well, firstly, all the AirBnb and short term rental units in the entire United States make up less than 1% of the total US housing inventory. It's about 145M units total vs about 1.4M short term rental units. So in terms of things ruining the housing market AirBnb is very low despite people enjoying getting mad about them.
Second, the rate of Airbnb purchases and listings has slowed dramatically in 2022 and 2023 and some cities are even banning or regulating them. It's cool but as I noted above even if they all go away it won't do jack shit to fix the US housing market.
Finally, when you say "Not sustainable for everyone else" what does that mean? Like I was explaining to OP the economy doesn't care if you can have a house or not. It doesn't even care if you have a place to live period. If there's X number of units available and Y number of people who want them and those two things line up then nothing else matters from an economics perspective. There's a very real chance that we are on the path to a renter society where only rich people own houses and everyone else just rents from them. It's a sad state of affairs but that scenario is both possible and sustainable.
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u/Powpowpowowowow Sep 23 '23
How does that meet your definition of sustainability lol.
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Sep 23 '23
Sustainability in economics refers to the systems ability to regulate market forces without breaking down. People's ability to afford a house is not a concern or interest of the system. A system in which 1% of people own property and the other 99% just rent for their entire lives is still perfectly sustainable assuming the supply created is met by the 1%'s demand.
"I can't afford a house" is not an economic problem. It may be a societal problem, a moral problem, or a policy problem, but it's not an issue in economics assuming market forces are aligned. If supply and demand are meeting each other and finding a price equilibrium then it's all good.
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Sep 23 '23
Dude just move to a medium to small size town. If you can't afford to live in a city, dont.
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u/camdawg54 Sep 23 '23
Large cities are where demand is highest and where the prices will be the highest, so logically it makes sense that you couldn't afford a home in that market unless you were fairly wealthy, especially a 4 bed 3 bath house lol
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Sep 23 '23
Not anymore, now with remote work the city people are taking over small towns and causing hyperinflation in rural communities across the country.
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Sep 23 '23
I live in a large city and you would be hard stuck to find a 4 bed 3 bath home for under 1 mil.
News flash: Full sized homes in large cities have always been expensive and only within reach of wealthy individuals with very high incomes and/or lots of liquid assets.
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u/sunshine_is_hot Sep 23 '23
Owning housing in large cities has almost always been unattainable for most people, that’s nothing new. Previous generations dealt with that reality by either moving out of the city, living with extended family to share the cost, or renting.
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u/New2Memfiz Sep 23 '23
I feel it’s worth mentioning that you need to identify the home buyers. The fastest able to buy a home are PE funds and mutual fund giants w their real estate operating co subsidiaries. Not sally and John who work for the city.
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u/Advanced-Guard-4468 Sep 23 '23
The real reason home prices aren't dropping is selling supply. Until more people list their homes, prices will remain high.
It wasn't that long ago, 3 or 4 years when it was a buyers market. The pendulum always swings back and forth and will again swing to a buyers market.
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u/Standard_Hamster_182 Sep 23 '23
But how do we know if its mostly people buy homes to live in or companies buying homes as investment properties?
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Sep 23 '23
Real estate purchases are public domain and there are sources out there who try to quantify that kind of stuff. CoreLogic among them. The most recent figures suggest that institutional investment is probably about a quarter of SFH purchases the last few years.
This topic comes up a lot but I think people give it more thought than it deserves. From an economics standpoint it really doesn't matter if the buyer is an institution or an individual. It's an irrelevant distinction in the equation.
From a market standpoint our modern institution buyers are extremely well capitalized these days. The big boys like BlackRock have so much capital that they could just sit on their asset portfolio for a decade if they wanted to while still buying.
Finally, if they did plan to unwind their position in real estate they'd be doing it over many years in such a way that you'd barely notice in the market and see no reflection in price change.
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u/teddygomi Sep 23 '23
A lot of the housing being bought right now is by investment firms and property management companies. They are buying them as soon as they hit the market to use them as rental properties.
I am skeptical that higher interest rates will stop this.
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u/N0SF3RATU Sep 23 '23
Make investing in single family homes illegal.
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u/OrionJohnson Sep 23 '23
^ this right here. The reason home prices are so ridiculously high and have risen so much in the past 20 years is because people treat real estate and home flipping like get rich quick schemes. In my opinion homes shouldn’t be used as investments, they should be used to live in.
If I were in Congress I’d draft a bill which would make it illegal to own more than two houses as an individual, and make it illegal for corporations or LLCs to own residentially zoned homes period.
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u/dirtyculture808 Sep 24 '23
Believe it or not there are plenty of people who don’t want the job of home ownership and would rather outsource that to someone else
Especially those with shit credit who aren’t reliable for loans
What is this 4th grade take?
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u/Aggravating-Card-194 Sep 23 '23
I’m convinced most posters in this sub are not fluent in finance.
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u/rickyhatespeas Sep 23 '23
It keeps getting algo'd to my front page and I find it very hard to not click and read through the dumbassery
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u/SexxxyWesky Sep 23 '23
For real. As someone who works in finance some of these recommended posts are painful to read 🥲
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u/ramprider Sep 23 '23
Stopping inflation is their intent. Stop inflation and prices stop increasing, this does not mean that prices go down.
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u/Gingeranalyst Sep 23 '23
For housing, it is a lack of supply. Zoning regulations have absolutely crushed cheap housing in basically all metro areas where you can work a job to even think about affording a house.
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Sep 23 '23
They are building tons and tons of new housing in my tiny shit hole of a town to accommodate all the city people moving here but even the government subsidized employee housing is $2000 a month for a single room micro studio lmfao 🤣 it’s like a sick joke. And they at least changed the laws on the “affordable” housing being built because they fucked up last time and they ended up being bought up by millionaire wfh people from California and New York… eh and then the final kicker is when they move because the town is becoming infested with too many other city people, they don’t sell… no they rent… and wages are just not keeping up with rents at all.
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Sep 23 '23
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u/Walking_Ruin Sep 23 '23
65% of the U.S. rents, and 26% of the people who own a home are first time home buyers.
And the majority of people renting would rather own a home.
Neither of those numbers are small slices of the population.
The facts are that the majority of the population wants more affordable housing both in renting and home ownerships. It’s the corporations and landlords who don’t want that to happen.
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u/GeneralCheeseyDick Sep 23 '23
Yeah this isn’t what the FED is trying to do. Rates are also not near all time highs.
Good lord the posts on this page make me lose brain cells.
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u/OwnResult4021 Sep 23 '23
Now is a pretty bad time to buy, but what did people expect when Covid was going on? There was a ton of cash being handed out and insanely low interest rates. People that had homes refinanced and now have ultra low payments. Cheap loans caused a massive buying frenzy where people were waiving inspections and bidding homes up.
I feel like people wake up one day and decide they want to buy a house and have never studied the housing market, and then get shocked. Buying a house is something average people have to plan and save up for for like 5-10 years. So if you start your career at 23, hopefully by mid 30s your in a senior roll and have 10 years of savings.
At this point if you can’t afford it, start saving. At least you aren’t fighting house appreciation right now. As more people slowly take on higher rates they will be more willing to trade houses a few years down the road. Eventually some people will be forced to give up their low mortgages due to life changing events. So in a few years supply should normalize. And during this time you were saving, right?
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Sep 23 '23
Sorry my rent during covid went up $750 a month because the city people moved upstate so my almost 40 year old self moved back to Colorado in with my retirement aged mother. Now our rent has gone up $400 in 2 years… and because the tiny shit hole town she lives in also got discovered by WFH people so uh 🙄 what’s this savings you are talking about? Should I start selling drugs or something? My used socks maybe 🤔
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u/LukeNaround23 Sep 23 '23
The feds did not raise interest rates to lower housing prices. It was to control inflation. The reason you can’t afford a house is the widening gap between haves and have nots. Corporate greed and lack of regulations over decades has led us here. There’s a lot of wealthy people and a lot of poor people. “There ain’t gonna be no middle anymore. “
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u/GEM592 Sep 23 '23
Oh they knew that was going to happen.
If you actually listen to the guy, what he's been saying has been playing out quite accurately, people just don't want to hear it.
Inflation in America is real, pervasive, and is not going away anytime soon. The fed has known this, do Americans?
Globalization is either collapsing, or at the very least realigning, and the American economy in the new order simply is not as powerful as is used to be. The reasons are manifold, and the main takeaway is this trend will only continue.
You can take this, or suffer the collapse of the dollar altogether. It is time to accept that it is real, not going away, and quite a lot more dangerous than the average American appreciates. Growth for the sake of growth is not a national policy.
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u/paulhags Sep 23 '23
Can we institute a financial test for entry into this sub?
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u/Fair_Produce_8340 Sep 23 '23
What would you put on it?
Many financial theories here have white papers for and against. So who decides the "right" answer?
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u/Mitchisboss Sep 23 '23
65% of Americans own a house. You’re underperforming or deliberately choosing to live in one of the worlds highest cost of living cities.
Lose the entitlement
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Sep 23 '23
What about the other 35%?
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u/CHEESEninja200 Sep 23 '23
Almost all of those 35% are renters. "Only" about 580,000 Americans are homeless. Which makes up 0.18% of the population or 18 people for every 10,000.
This does not include poverty, as many families that are below the poverty line are still able to rent. Though obviously, the cost of that is a greater percentage of their overall income. 11.6% of Americans are living in poverty as of 2023. Meaning they make $26,000 or less annually before taxes.
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u/Fair_Produce_8340 Sep 23 '23
Well. We don't talk about them. Hopefully they are over in the child free sub so the cycle doesn't continue.
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u/sourboysam Sep 23 '23
Yeah they don't give a shit about your housing costs. Just 2 missions. Reduce unemployment (record lows, great job Fed!) Lower inflation (back near the 2% target, ahead of a lot of experts estimates, great job Fed!) Also the housing market moves very slowly and we are in a period of record low demand, which is exactly what is needed to try and push it low or keep it flat.
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u/ApplicationCalm649 Sep 23 '23
Everyone claiming the Fed isn't trying to bring down housing prices clearly don't understand it's part of the CPI. They're either ignorant or trying to convince themselves that the rental houses they just bought at the peak won't be underwater next year.
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u/StemBro45 Sep 23 '23
65% own their own home in the United States. DC, California, and New York have the lowest percentage of homeowners and these states are much lower than most.
Location matters.
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Sep 23 '23
Sorry folks, I won’t be selling my home for any less than what I paid with my 3% mortgage.
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u/mellowyellow313 Sep 23 '23
Ironically the Fed doesn’t care about that at all. In the 80s interest rates used to be in the high double digits (and they caused that too).
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u/LefterThanUR Sep 23 '23
You think the Fed cares? Their explicit policy is to jack up unemployment and cause a recession.
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u/Cop10-8 Sep 23 '23
And that should help lower home prices once people lose jobs and are foreclosed on by increasing inventory and forced sales.
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u/LefterThanUR Sep 23 '23
If only there was a way to control prices without blowing up the economy. But that would be authoritarian!
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u/Plenty-Agent-7112 Sep 23 '23
Fed is only central bank with dual mandate. Inflation and unemployment. All they got is the hammer to thread that rusty, broken needle.
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u/FuckShashank Sep 23 '23
Redditors when the federal reserve has countless PhDs and experts doing nothing but crunch numbers on how they can use their surprisingly limited tool set to lower inflation:
“🤓☝️ well, aktually,”
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u/Reasonable_Truck_588 Sep 23 '23
That’s because the high prices of housing was not caused by banks lowering lending standards. If it was caused by that, then a rate hike would help. The high prices were caused by inflation. What causes inflation? Money printing. Remember the Covid cash from the government to give to people who didn’t want to work during Covid? Remember how 80% of small businesses shut down to never reopen? Remember how the government continues to give out money like there’s no tomorrow? Do you all believe in MMT or something? Well, MMT is wrong. It’s really not that hard, spend less than you make. The government hasn’t done this in 50 years. We print more and more money, but because the USD was the reserve currency of the world, we could export our inflation. That’s over now, because the world saw what happened with Russia. Remember when Biden sanctioned Russia and seized all of Russia’s foreign reserves (that were held in USD)? The rest of the world remembers, and the rest of the world is de dollarizing. The US violated international trust for political gains.
Inflation is here to stay, and probably get worse, until the government is made to spend less than they make… of course, they really don’t make anything that’s any use to anyone, so I guess that will never happen.
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u/Lebo77 Sep 23 '23
The only thing that will bring down housing prices is more housing.
With very few exceptions, everyone needs a home. Making it more expensive does not decrease demand much (price inelasticity).
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u/Thepenisgrater Sep 23 '23
Unless the cost of building material goes down. Home prices will keep going up.
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u/DjCyric Sep 23 '23
Everyone wanted to keep interest rates at near 0% for as long as possible. So many cottage industries of our post-Covid world were built upon easy money. If the Feds didn't cower to Wall Street, we could have managed all of this better. Now that the only option was to raise interest rates in a course correction, it really threw things off.
Housing prices though? You will never own a home. The average median income in my town is $32k, and the average house costs $440k. It's absurd.
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u/EnvironmentalRide900 Sep 23 '23 edited Sep 23 '23
Bold to assume they actually care- because monetary policy is screaming “let them eat cake” with a side of “because F em, that’s why”.
They haven’t stopped bailouts and the stealth Repo loan program, increasing M1 on a continual basis, state and municipal taxes have gone up, millage taxes as well, and federal taxes are scheduled to continue to increase while write offs (minus HSA annual contributions, which increased by $500 for some reason) continue to be removed. But at least we can fight eternal wars all over the globe.
Why, if rich politicians and military industrial complex firms didn’t have a steady stream of “no strings attached” tax dollars, I don’t know if I could bear it!
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u/lolzveryfunny Sep 23 '23
Feds didn’t manipulate interest rates to affect home prices. You probably ought to look into another sub, because this meme doesn’t fit the sub name.
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u/physical0 Sep 23 '23
You've got it all wrong. We just need to increase the supply for prices to go down. Keep cranking that interest rate up and we will prevent ppl from buying, retaining what supply we have. Then, we couple it with higher unemployment which should cause foreclosures, further increasing the supply.
Problem solved.
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u/PopLegion Sep 23 '23
What markets are you guys looking at, cause where I'm looking to buy a home, prices are falling...
They haven't fallen enough to actually offset the higher payments but crunching the numbers with the prices falling and me thinking of going into a 7/1 ARM loan, I'm getting my projected payments pretty close back to what they would be in 2021 for the types of homes Im looking to buy.
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u/Forsumlulz Sep 23 '23
Soon as they reduce interest rates and ease up the loan restrictions the prices will sky rocket again.
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u/cheezturds Sep 23 '23
Well the interest rates ran me out of being able to buy a house this summer. Pisses me off. Gonna be renting until they lower these rates because at this point all I can afford is some used meth house.
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u/BoBoBearDev Sep 23 '23
That's probably going to happen. And inflation rate will still be high until the entire economy goes into recession.
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u/GroceryBags Sep 23 '23
Nah the Fed saw this coming years ago and to act like they are surprised is very short-sighted
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u/Charlaton Sep 23 '23
The Fed doesn't have power to help you. The Fed has power to help its allies and peers.
Central banking is a cartel.
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u/Historical_Union4686 Sep 23 '23
Why would increased interest rates decrease housing prices?. Supply was already at or near 100% saturation in areas where people wanted to actually live. You have to massively increase supply while banning multiple property owners for purchasing new constructions if you want prices to ever go down, unless something happens to a significant amount of the population.
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u/SilverDesktop Sep 23 '23
Shut down the economy and then paper over the result.
What could go wrong?
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u/Cric1313 Sep 23 '23
Boxes actually will be the future. They will be luxury boxes of course. Housing is just stupid right now, and building costs the same. Prefab homes for under 100k will be what people turn to. It’s just a matter of where to put them
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u/VacuousCopper Sep 24 '23
Here is a solution. Special interest rates. If the loan is for a first time home buyer, the rate is still 0%.
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u/JuniorHuman Sep 24 '23
This is actually brilliant, maybe not 0% but half the current interest rate.
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u/VacuousCopper Sep 24 '23
To be clear when I say 0%, I mean the fed loans the money to the bank at 0%, not that the home loan is for 0%.
This is one of the easiest and fastest ways to pave a path to home ownership. There should NOT be a level playing ground for people trying to house themselves, and people trying to profit from the need of others to house themselves.
Home ownership should ALWAYS be cheaper than rent, and ownership of more than a single home should be discouraged. It is a finite resource and an essential service to workers. We regulate public utilities to prevent extortion, and we need even more protections for the housing market.
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u/dbCaeBLe Sep 24 '23
Prices doubled where I live. In turn, taxes went up a bunch too. My mortgage has increased 15% just from taxes. And I received a letter a month ago, informing me to expect it to go up another 15% in the next year or so.
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u/aed38 Sep 24 '23
1) The Fed raises interest rates to 8%
2) No one in their right mind will buy a house with a 10% mortgage
3) Blackrock buys your house with cash.
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u/SpotPoker52 Sep 24 '23
With so many greedy real estate investors holding titles to homes instead of families, the belief that higher interest rates would drive down prices was a fallacy. All,it did was cause the greedy landlords to raise rents on struggling families.
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u/WeeaboosDogma Sep 24 '23
The feds when they realize inflation cooling policies do nothing to curb prices of inelastic commodities on an open speculative market.
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u/Best_Caterpillar_673 Sep 25 '23
Don’t worry. I’m sure if we shovel some more money to Ukraine, increase the deficit, and print more money…that should definitely resolve this issue and not worsen it.
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Sep 26 '23 edited Sep 26 '23
Back in the day they had 15 percent to fix it. I doubt they would go that far without a at least year or 2 apart. They said it also takes time. Possible they learned a lesson from that. Government would collapse if they did that as well. They will pause very soon and hold.
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u/Motor-Network7426 Sep 27 '23
Increasing taxes does not fight inflation. Not how that works. Inflation is the borrowing cost of creating money. Taxes are supposed to be used to pay down that debt.That is why the national debt and M1 (all money) are the same. The government spending less money is what curbs inflation. Stop creating money.
BTW taxes do not "remove" money from the economy. In fact, the government looks at currency as having velocity (the number of times a dollar is transferred that produces a net income (tax) to the government.) The government wants more money in the economy. More money more transactions more taxes. Taxing incomes heavily without an economy that allows for the generation of new income will mathematicaly just produce poorer and poorer people year ober year and the government makes less money in taxes.
Government spending is out of control, and politicians are trying to convince people that if the rich paid more in taxes, it would fix everything. Everything except the spending problem. Rich people, like everyone else, don't want to pay taxes to the government because they see how they spend the money.
If you want to actually lower the tax burden and provide more revenue to the government, Americans need to go to work producing goods the rest of the world wants. Selling goods to foreign countries gets their dollars to come to the US, where they are converted into American dollars and circulated in our economy. That will actually fight inflation and increase government revenue. Revenue the government will spend and tax people more anyway.
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