Loan clerks do have a certain responsibility. After all, they are the (often unwitting) creators of money! Before they give any loan-request their thumbs-up, they must check it helps their business. This mechanism means: more money for housing, less for budding businesses. In German, real estate means Immobilien = things that don't move. Things that move, e.g. new businesses, are harder for a clerk to grasp, and there's less to seize if the loan goes bad. Great new businesses are by their very nature hard for newcomers to understand. (Or I'd have invented facebook.)
This effect of fresh money being inordinately heavy on housing is why this particular crisis started in that field.
The system by which our money is created (debt) means that housing prices go up in relation to your income and mine. What we spend on housing doubled in the decade leading up to the crisis. Isn't that a rather hefty price to pay, just for not being able to come up with a better way in which to create our money? It helps no one, unless you happen to own a whole lot of real estate.
Via housing, the current system of money creation also transfers wealth from young to old, simply because the young buy their houses later, if at all.
by Michael K for Banks need Boundaries!
- In the run-up to the 2000 Internet Bubble, it was business plans containing "www" that went over the top. It's the same principle: money being created for the wrong reasons. (Instead of a Sovereign Money system where loans can only be given from money that already exists – an altogether more stable system!) Amusing anecdote, se non e vero e ben trovato (If it isn't true, it's still very poignant): The famous bubble involving tulip bulbs. Another era (1637), before bailouts. Not that the bankers didn't ask for one – just that in those days, the government could coolly deny responsibility and point out "you're crazy, go see a doctor." (Georg Schramm)
- Positive Money, Why are house prices so high? – in London, they even tripled!