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Affording a house is not the same as affording the interest. Govt silly.

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  • Affording a house is not the same as affording the interest. Govt silly.

    I really worry that the Govt are just silly.
    Or at least, to be kind, financial amateurs.

    While being able to afford a house and being able the afford the interest on a house, seem similar.
    They are vastly different.

    Grief, they even extend that poor logic to day to day household finances.
    (You don't want to make debt more affordable, you want to stop people from having to go into it in the first place) *

    Here's a little comedy sketch to illustrate the stupidity of it all.







    * Yes I'm fully aware of economic theories around the advantages of expanding money supply. It can only be done in certain specific situations, but not like it is now.
    Last edited by McDuck; 19-12-2020, 07:14 AM.

  • #2
    ^^ great video McDuck - I recommend everyone watches it.

    I remember when I wanted to buy my first car - when I was in my late teens and Dad said I had to save for it. I did.

    But who does that now - it's 'get the car' and pay for it later. There's no understanding or even curiosity of what 'paying for it later' actually means - i.e. you pay more for the car.

    We're educated to want instant gratification and love debt - and hence the focus is on interest repayments affordability and not on whether you're getting a good deal with your purchase and if you should take on the debt.

    Governments want people spending what they don't have - they encourage it and they too do it!

    Plus isn't everything a Ponzi?

    cheers,

    Donna





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    • #3
      Ha!

      You are breaking the great rule.. "DON'T VORRY", Get anuzor credit card", Vell done you.

      But yes, same, I worked, saved, and paid cash for my first car, too.
      I learned to choose between an extra few drinks at the pub or a comfortable ride on the way to work.

      To answer your Ponzi question, hmmm...
      I'm not sure.

      In some ways, it's much worse than any Ponzi scheme.

      Because, at the moment, there simply is no option for normal people to buy houses from their savings.
      There isn't even a chance for them to afford just the interest from savings. (without the reserve bank artificially suppressing the rates).
      (And, as you cleverly note, intentionally putting the housing market on steroids)

      I guess, if the main feature of a Ponzi, is lack of sustainability, then YES, you could call it a Mega Ponzi.






      Last edited by McDuck; 21-12-2020, 07:28 AM.

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      • #4
        Originally posted by McDuck View Post

        (And, as you cleverly note, intentionally putting the housing market on steroids)
        Now, that's something I had not thought of.

        "A man's home is his castle" This is something often said.

        If the majority (of voters) were on some sort of Government subsidy and Government supplied housing. How will they vote?

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        • #5
          ^^ Hello socialism. We’re getting there with 1 in 5 on a Government handout - it’s probably much higher now too.

          cheers
          Donna

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          • #6
            Originally posted by donna View Post
            ^^ Hello socialism. We’re getting there with 1 in 5 on a Government handout - it’s probably much higher now too.

            cheers
            Donna
            Don't forget that the Govt isn't the major player in the house price inflation problem.
            The major player is the one who drops a wad of money into the system.
            That's the Reserve bank.

            Political ideology isn't driving these present and past QE actions.
            Some say that pure greed, laziness, and incompetence is..

            but..

            The silliness to confuse affording a house with affording the interest on a loan for a house ...
            Well, that's totally down to the shortcomings of the present Govt ministers.
            Home ownership delayed, is home ownership denied.

            Last edited by McDuck; 23-12-2020, 07:31 AM.

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