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The Shock of Sweden's Housing Market Is Hitting the Country's Currency

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Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#431

Earlier quoted context omitted.

"But since the late seventies, money creation is only possible through the banking system via credit." ? I don't know how the Kroner works, but usually a central bank issues currency into the market in exchange for some kind of asset - this is the primary mechanism for controlling interest rates. Yes, more credit is created through fractional reserver, but this is taken into account.

> more credit is created through fractional reserve There is no such thing as fractionnal reserve credit in 2017, bank don't need reserve to lend, they need reserve to hold bank accounts for their customers.

?

The fact banks can lend out more than they have in deposits means there is 'fractional reserve credit', or 'fractional lending' currently, in 2017.

Most of the credit in the world is created this way, actually.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#432
post #166

Earlier quoted context omitted.

Yes and no: The bank wants 2% as interests, but inflation is 3% --> The Bank effectively loses money

The bank only has to have a very small percentage of the money they loan you. Most of it is created at the time of the loan.

Exactly, the bank is not hurt from money devaluating when they don't have to do anything for it but create a dept in their books. Sure, what you will pay them will be less in 20 years but it more than the nothing they had before...

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#433
post #332
post #324

Earlier quoted context omitted.

No, not at all. Other economic views are definitely comprehensible to me, however this particular one is mind boggling because me and OP seem to have genuinely incompatible principals and values. "housing should be free" - according to who? What entity is coercing the 'should' in that sentence? What law of nature says that housing should be free? It implies in a society that you have a right to someone else's time an…

I mean, in every modern country you have the right to someone elses time and labor. Most places have socialized medicine, literal usage of someones elses time for free and compensated by society as a whole, you use roads you didn't directly pay for, etc. In a lot of places you can (or used to) get free water. Literally other peoples work for free. Almost all the structural parts of modern society are built on providi…

> I mean, in every modern country you have the right to someone elses time and labor.

I notice you qualified this with 'every modern country'. Is this a coincidence or do you believe that a 'right' to other people's time and labor is necessary for being a 'modern country'?

> Most places have socialized medicine, literal usage of someones elses time for free and compensated by society as a whole, you use roads you didn't directly pay for, etc.

Usages of socialized medicine, roads and anything else that is compensated by "society" are not rights. They are privileges paid for by taxes.

> In a lot of places you can (or used to) get free water. Literally other peoples work for free.

Getting something for no cost because it's given to you at no cost does not constitute a 'right' to that thing. If I gave you a bottle of water, that does not mean you have a right to my bottled water, or bottled water in general.

> But in general, modern states exist in part to forcibly take from some to give to others by the whims of the majority.

Now this statement is utterly fascinating! What are the other parts that they exist for, in your opinion?

> Currently them, but if it were according to most in most democracies that would mean it would eventually become law.

Let's be clear, your statement about "housing should be free" means "housing should be free because the people that want housing decide it should be free". It's totally fine if you want free housing - 100% fine for you to want it. That's your right. It's not your right however to get free housing.

> States, as with all other legal uses of force.

Not quite, or at least not yet. We're still just talking about "people that think housing should be free". If you want to promote that responsibility to the State you have to make it a law, which means you'd have to draft a law (in the US at least) that did not violate the Constitution or the Bill of Rights. Even if it's a law, it would still not be a right.

> No law of nature says property rights exist (especially intellectual property), but we make those up to establish civilization.

I would argue that nature says I have a right to whatever land I can take and defend. If I can't defend it (by paying taxes, or whatever other modern agreements there are between me and everyone else) it will likely be repossessed. Society tends to support that natural right by acknowledging things (at least in the US) like private property laws, trespass laws and castle doctrines. Of course ultimately the state could just take my land by force - that's nature's law in action!

The root of my objection is that no one has a right to my time and labor (or yours or anyone else's). You can buy my time and labor, or we can barter for my time and labor, or I can choose to give you my time and labor. People can take it by force[1], but not by right.

[1] http://www.endslaverynow.org/act/educate/human-rights-and-sl...

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#435
post #283
post #25

Earlier quoted context omitted.

Totally agree. It seems one of the factors that helped the US until the 90s was that housing was affordable so people could move around easily. A "strong" housing market seems to indicate that there are no productive places for investing and no wage growth so people need to gamble on houses to rise instead.

There's been a number of great bits of research over the past few years arguing that our "strong" housing market is a primary cause of economic stagnation. Let me count the ways: (1) reduced labor force agility as you say (2) high rent and mortgage cost soaks up money that could otherwise fuel consumer spending, creating a demand constrained economy (3) high housing costs in major cities also contribute to poverty el…

Got any reading on that? I'd never thought of it that way, but when you say it, it seems very plausible.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#436

Earlier quoted context omitted.

Is this really true?? I think if you are selling a home that is not your primary residence then there is some sort of tax but I'm not 100% sure of the details.

It's true for the primary residence. For secondary properties most people are just going to move in for 2 years to meet the requirement.

[deleted]

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#437
post #429

Earlier quoted context omitted.

If you sell a house for $2M cash and have to pay capital gains taxes, and then buy a house for $1.6M, you do not have $400k in cash afterward.

If you sell it after 2 years and it's your principal residence you do actually have $400k in cash... https://ttlc.intuit.com/questions/3229450-sold-primary-house...

No, you do not. If you buy a house for $1M, sell for $2M, you pay taxes on $500k. Those taxes are ~34% if you're in California, so you pay about $150k in taxes. You buy a house for $1.6M, you have $250k left, not $400k.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#438

Earlier quoted context omitted.

> more credit is created through fractional reserve There is no such thing as fractionnal reserve credit in 2017, bank don't need reserve to lend, they need reserve to hold bank accounts for their customers.

? The fact banks can lend out more than they have in deposits means there is 'fractional reserve credit', or 'fractional lending' currently, in 2017. Most of the credit in the world is created this way, actually.

Have you seen the balance sheet of a bank? They don't lend out more than they have in deposits.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#439
post #438

Earlier quoted context omitted.

? The fact banks can lend out more than they have in deposits means there is 'fractional reserve credit', or 'fractional lending' currently, in 2017. Most of the credit in the world is created this way, actually.

Have you seen the balance sheet of a bank? They don't lend out more than they have in deposits.

Banks definitely lend out more than they have in deposits. [1]

It's why you've heard the term 'reserve ratios' etc..

[1] https://www.investopedia.com/articles/investing/022416/why-b...

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#440

Earlier quoted context omitted.

https://www.federalreserve.gov/pubs/feds/2010/201041/index.h... The St. Louis Fed tends to have the largest set of articles on economic policy, generally. Here are 632 results for "fractional reserve": https://encrypted.google.com/search?hl=en&q=site%3Astlouisfe... And limiting to 2010 and subesequently, 27. None declaring the concept dead. https://encrypted.google.com/search?q=site%3Astlouisfed.org+...

> And limiting to 2010 The second paper on the page is from 1968 … In the US, there is no limit anymore on how much credit you can lend given the amount of reserve you have, the reserve requirement is on deposit not credit lent. https://en.m.wikipedia.org/wiki/Reserve_requirement

Please cite your source(s) that reserves and reserve requirements no longer exist, are no longer linked to money supply, and are no longer Fed policy.

Thank you.

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