I think much of this obscene wealth is kind of “fake.” Like, if I buy a house, and I do nothing to that house, no improvements, nothing, then turn around and sell that house for double what I bought it for, was any new wealth created? I now have more money, and the person I sold the house to now has an asset that is worth double what it once was, but where did all this new wealth come from? The house didn’t change at all.
I mean, let’s say I bought the house for $100,000, I wait a few years and sell it for $300,000, I just made $200,000. Then the person I sold it to sells it after a few more years for $500,000, making him $200,000. Then the person he sold it to sells after a few more years for $700,000, and he makes $200,000. That’s $600,000 thousand dollars generated from one asset. Isn’t that a little odd? It seems like at some point someone is going to buy the house but they’re not going to be able to sell it for more than they bought it for. I just don’t see how assets can just keep going up in value forever.
The last part of your first paragraph is what I truly don’t understand. If I pull a trash bike from the garbage pile and sell it to an idiot as a vintage bike and he pays me 50000 dollaroos for that, I just scammed that dude. The bike still belongs in the trash.
The house isn’t creating new wealth. The new wealth was created elsewhere in the system and used to pay for the house. The value of the house going up isn’t the same thing. Now if you use the increased value of the house to back a second mortgage, that’s when you’re creating wealth. But you’re doing it through the fractional reserve banking system, whose entire job is to create wealth by loaning out copies of money.
I think much of this obscene wealth is kind of “fake.” Like, if I buy a house, and I do nothing to that house, no improvements, nothing, then turn around and sell that house for double what I bought it for, was any new wealth created? I now have more money, and the person I sold the house to now has an asset that is worth double what it once was, but where did all this new wealth come from? The house didn’t change at all.
I mean, let’s say I bought the house for $100,000, I wait a few years and sell it for $300,000, I just made $200,000. Then the person I sold it to sells it after a few more years for $500,000, making him $200,000. Then the person he sold it to sells after a few more years for $700,000, and he makes $200,000. That’s $600,000 thousand dollars generated from one asset. Isn’t that a little odd? It seems like at some point someone is going to buy the house but they’re not going to be able to sell it for more than they bought it for. I just don’t see how assets can just keep going up in value forever.
I mean there’s where inflation is coming in
The last part of your first paragraph is what I truly don’t understand. If I pull a trash bike from the garbage pile and sell it to an idiot as a vintage bike and he pays me 50000 dollaroos for that, I just scammed that dude. The bike still belongs in the trash.
I don’t see this changing until the housing supply exceeds the demand. At the rate we build, that’s not happening any time soon.
The house isn’t creating new wealth. The new wealth was created elsewhere in the system and used to pay for the house. The value of the house going up isn’t the same thing. Now if you use the increased value of the house to back a second mortgage, that’s when you’re creating wealth. But you’re doing it through the fractional reserve banking system, whose entire job is to create wealth by loaning out copies of money.