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Rich people do have trouble understanding what it's like to be poor

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Re: Rich people do have trouble understanding what it's like to be poor

#321

Post by imtringued »

frankbreetz wrote: post #199
throwaway1777 wrote: post #193

Earlier quoted context omitted.

It’s not only a supply issue these days. Even areas that have basically unlimited land and building in Texas have prices going up massively. How do you explain that?

Building supplies have grown at an insane rate. A lot of builders went out of business because of 2008. It is still a supply issue, just not a land supply issue.

That's a short term problem, it may last 5 years for all I know but it will get solved eventually. Zoning on the other hand is something that will stay for decades and it gets worse over time.

Re: Rich people do have trouble understanding what it's like to be poor

#322

Post by imtringued »

bradleyjg wrote: post #168
hn_throwaway_99 wrote: post #144

Earlier quoted context omitted.

Presumably restrictive zoning policies that make it incredibly difficult to build the amount of additional housing that is needed in many areas.

That, but also the entire GSEs edifice, the Fed’s MBS purchases, and lots more.

Overpriced houses make construction arbitrage easier. It's easier to build a new house than to buy an existing one.

Re: Rich people do have trouble understanding what it's like to be poor

#323

Post by slightwinder »

aspaviento wrote: post #5
FriedrichN wrote: post #3

A more distant but very wealthy family member once said that people wouldn't be so poor if they just saved up money. That perfectly illustrated the difficulty rich people have understanding poor people to me. I was really young, but that really stuck with me.

I remember a politician complaining about having difficulties with a salary of 6000€/mo. Some people live in a bubble so far from the real world that almost seems fantasy.

This only shows that it goes both ways. Everyone does only know little about the live of others. I could easiely see a politican needing to spend more money to build and maintain their career. Similar it could be bullocks and the guy is just greedy. It's hard to understand from the outside.

Re: Rich people do have trouble understanding what it's like to be poor

#324

Post by nightski »

c22 wrote: post #145
c22 wrote: post #126

Earlier quoted context omitted.

My cell phone bill (for my family of 4) would be around $120/month, but it's discounted down to around $80 because of my employer. There's no note on our car cause we could afford to just buy it with cash. We never spend money on doordash because we have plenty of time to go shopping and make our own meals. For the most part we have rent (mortgage), food, utilities, insurance, and day care (have you looked into the c…

Here's another way to look at it, we're grossing around $100k a year and only managing to save about $25k of it. I don't understand how a family that makes $60k a year (about 3 full time minimum wage jobs) manages at all. Our lifestyle is not opulent.

That is entirely dependent on where you live. Plenty of people live quite well on 60k (which is the median household income in the U.S.). Obviously not in San Francisco or New York.

Re: Rich people do have trouble understanding what it's like to be poor

#325

Post by imtringued »

mindslight wrote: post #177
e40 wrote: post #112

Earlier quoted context omitted.

What are you talking about?

The Federal Reserve's overt mission is to dump new money into the economy to create inflation. But since they only pump it into the overgrown financial sector, we get asset inflation rather than general price inflation. Every time interest rates are lowered, land prices go up, because the monthly (financial) rent remains the same. Similarly with down payments (20% -> 5%). The next step will be lengthening mortgage te…

The problem with relying on interest rates is that cash provides a lower bound of 0%. It's simply impossible to go negative on deposits without at least abolishing cash. Relying on the federal government doesn't work because the republicans are uncooperative. So the only measure left is to just bypass everything and hand out money directly. I'm actually hoping that the pandemic raises the inflation rate to 2% over the long term and that no intervention becomes necessary in the future.

Given enough inflation, interest rates will go up and then we can start getting rid of zombie companies, increase productivity growth and have growing wages again.

Re: Rich people do have trouble understanding what it's like to be poor

#326

Post by throwaway6734 »

pjc50 wrote: post #139
throwaway6734 wrote: post #102

Earlier quoted context omitted.

The solution is to move to an area with cheaper housing. Moving to opportunity is the American way

Cheaper housing => longer and more expensive commute. Or worse job opportunities. Then people tell you to move where the jobs are. Which has really expensive housing. The free market tends to flatten this stuff out

>Or worse job opportunities. Then people tell you to move where the jobs are. Which has really expensive housing.

This is not entirely true. I live in Baltimore City and there's cheap housing + access to the great tech market between baltimore and dc

Re: Rich people do have trouble understanding what it's like to be poor

#327

Post by imtringued »

bradleyjg wrote: post #313
mindslight wrote: post #177

Earlier quoted context omitted.

The Federal Reserve's overt mission is to dump new money into the economy to create inflation. But since they only pump it into the overgrown financial sector, we get asset inflation rather than general price inflation. Every time interest rates are lowered, land prices go up, because the monthly (financial) rent remains the same. Similarly with down payments (20% -> 5%). The next step will be lengthening mortgage te…

Each step is aimed at increasing the wealth of incumbent homeowners, not making housing more affordable. The economists at the Fed and GSEs are not stupid.

The Fed mostly wants to decrease unemployment via 2% inflation. The conventional wisdom is that supply side stimulus will create companies that hire workers. So handing out loans should do the trick. Yeah, except building housing which is one of the easiest ways to employ people is illegal.

Re: Rich people do have trouble understanding what it's like to be poor

#328

Post by the_only_law »

throwaway6734 wrote: post #326
pjc50 wrote: post #139

Earlier quoted context omitted.

Cheaper housing => longer and more expensive commute. Or worse job opportunities. Then people tell you to move where the jobs are. Which has really expensive housing. The free market tends to flatten this stuff out

>Or worse job opportunities. Then people tell you to move where the jobs are. Which has really expensive housing. This is not entirely true. I live in Baltimore City and there's cheap housing + access to the great tech market between baltimore and dc

I understand Baltimore has insanely cheap housing for its size, but I’ve always imagined it as a Detroit like situation, where yeah the housing is often cheap, but not areas you want to live. It may not actually be as bad as I think though.

Re: Rich people do have trouble understanding what it's like to be poor

#329

Post by slightwinder »

FriedrichN wrote: post #3

A more distant but very wealthy family member once said that people wouldn't be so poor if they just saved up money. That perfectly illustrated the difficulty rich people have understanding poor people to me. I was really young, but that really stuck with me.

It's not entirely wrong though. Coming from a poor family, and still not being wealthy, I learned that there are two types of poor people. The first ones are genuine poor, because they simple don't earn enough money to get a stable ground to act on.

The other ones are getting enough money to live from it comfortable enough, but are stupid in managing it, and make themself poor by they own inability. Knowing how to handle your money is an important skill for not being poor. But it's something that in the wasteful societys is not educated at all. Similar being a bit frugal and investing your money longterm is something especially the older generations seems to lack understanding for.

So for the second group of people your relatives comment makes sense.

Re: Rich people do have trouble understanding what it's like to be poor

#330

Post by xupybd »

mschuster91 wrote: post #275
an_opabinia wrote: post #269

Earlier quoted context omitted.

> no such thing as too late Go ahead and buy some homes for investment! Go buy some Dogecoin! Some GME! What a low information take, to say something about rural homes and Biden or whatever. In the service of curiosity: maybe if you sold your $185,000 home from 1986 for $1.5m today, you’ll walk away a millionaire. A lot of people are looking at that arithmetic in San Francisco. And yet they do not sell! The index for…

> They will watch the market fall The market won't fall, that is the entire point. It reasonably cannot fall, since the only politics that could make it fall (buildout of rural infrastructure, overriding NIMBY shit) won't ever pass. Inertia is massive.

The debt in the current world economy is unheard of, and the cost of housing is getting out of reach of first home buyers. Something has to give at some point.

If interest rates rise in the next 10 years then I suspect many will be left with mortgage payments they can't afford.

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