The idea that the government can somehow prop up house prices that were wildly inflated, largely due in part to the government’s involvement in the housing market in the first place, stuns me and leaves many questions unanswered. . The first is how are we going to pay for all these new expenses and what will happen when all this money printing causes runaway inflation, which will have a direct negative impact on the housing market, as the Fed will have to raise interest rates to control inflation.
Higher interest rates will lead to higher unemployment due to the fact that employers cannot obtain affordable lines of credit to meet payroll and other short-term debt obligations. This is a very real threat that this administration has failed to address, and for good reason. Because the reality is this; no matter what action they take to “fix” the housing market, all attempts to try to turn the market around are going to do more harm than good and many politicians on both sides of the aisle know this. But they feel the overwhelming urge to act, even if it’s going to do more harm than good, for nothing more than to give the impression that they “care” but really all they really care about is getting re-elected.
The wisest action of our politicians is inaction, stop trying to be the hero you are not, you are doing much worse than necessary. All this bad debt has to be removed from the system so that the markets can correct themselves. If the market correction means some businesses fail and people lose their homes, so be it, so be it. It’s so much better than the alternative. Failure is not the end of everything; instead, it is a new beginning for a new beginning.
But oh no, I can’t just sit there and do nothing, that would be politically unacceptable. So what they do; they pump massive amounts of our money into pet projects on top of giving billions more to the banks, all in the name of saving the economy. But as we’ve seen with the first 350 billion, it didn’t go as planned, which was predictable considering the situation.
Instead, the banks took the money and hoarded it to shore up their own finances and acquire other banks. He did nothing to increase demand for homes, as the sales figures indicate. If I, as an individual, am losing money to the point where I’m on the brink of insolvency, you think I’m going to do the same thing that got me into that dire straits in the first place. Hence the reason why banks decided to play it safe by keeping the money instead of lending it. Keep in mind that this is all being orchestrated by the very people who helped get us into this mess in the first place.
These are the facts as we know them. President Obama wants to cut the deficit in half by 2013. Sixty-eight percent of small business owners under Obama’s tax plan will end up paying higher taxes. Seventy percent of all workers in this country are employed by small businesses. Even if you seize all the money earned by people making $75,000 or more, it’s still not enough to cover the cost of the new spending this administration has proposed thus far.
As the numbers show, it is mathematically impossible to cut the deficit in half, as the president has said he intends to do without significantly raising taxes on small businesses and the middle class. As most people already know; tax increases deprive the private sector of the capital needed for expansion and job creation, assuming the economy is healthy. But as we all know, this is not the case at all, so now it becomes more of a question of being able to keep more capital in the private sector as a means of stopping the bleeding, rather than looking to expand and increase the number. of the employees. If anyone has any doubts that higher unemployment will lead to a further decline in home values, just take a look at the state of Michigan.
Regardless of your position on the political spectrum, one thing we can all agree on is that the numbers for the new administrations don’t add up. The bottom line is that the federal government has proposed so much new spending through this latest “stimulus” bill that it is almost impossible for hyperinflation not to occur in the next ten years, as history has shown us.
The Federal Reserve will have no choice but to raise interest rates, putting further downward pressure on home prices, causing decreased demand due to higher monthly payments. The federal government will be forced to cut spending, which will lead to decreased amounts of money going back to the states to pay for “essential” services, forcing state governments to raise property taxes ( at least until the people riot), even though property values will continue to fall. Increased taxes on small businesses will cause higher unemployment, which will cause a drop in demand for housing. As employment becomes increasingly difficult to come by, people will be forced to opt for lower-paying jobs, diminishing their ability to purchase higher-priced homes.
People who are employed will have essentially lost their ability to collectively bargain for any real wage or benefit increases (yes, even the big unions, look at the UAW). Real wages will continue to decline as the purchasing power of the dollar continues to erode as hyperinflation sets in, having a huge negative impact on the standard of living in this country. The stock market will continue to fall as corporate profits fall and corporate tax rates rise, just another factor that will contribute to declining property values as people have less money for a down payment, a practice that has resurfaced in recent months. while banks try to protect themselves against future losses.
Americans will undoubtedly see a large decline in their standard of living in the next ten years, the fall in house prices is just the tip of the iceberg. Don’t get me wrong, some good will come out of this latest stimulus bill in the form of much-needed infrastructure improvements and construction work, but the long-term negative implications will far outweigh any short-term benefits.
Capitalism without failure is like life without risk; impossible. Imagine life without risk, we would all be driving 110mph with no regard for our own safety or anyone else’s because we would all be immortal without a care in the world. In essence, this is exactly what happened in the secondary mortgage markets. These banks acted like immortals, passing the risk on to the federal government through Freddie Mac and Fannie Mae. Our governments’ “too big to fail” policy has created backed banking immortals and we, the American taxpayers, will ultimately be the ones to die via hyperinflation, as a direct result of our reckless and irresponsible governments. share. Goodbye capitalism, you will be sorely missed by many, thanks for the memories.
