Housing Discussion

I voted for the government as the most responsible party. The Fed could not exist wihout its monopoly position granted by the government. But the government didn't stop with inflationary monetary policies. The government layered on regulations, tax policies, tax payer financed insurance, and many institutions dedicated to extending credit at below market interest rates.

Read about historical manias and you will find that they all involved monetary inflation. You will also find that rising asset prices caused the whole population to turn to asset price speculation. Why work for a living if you can make many times as much by buying assets "guaranteed" to go up? Read, for example, Extraordinary Popular Delusions and the Madness of Crowds, first published in 1841.

Yes, individuals become crazed and irresponsible during these episodes and many of us are smart enough to avoid the carnage. But inflation's siren song gets most people, time after time. After all, many players do in fact benefit enormously by getting in early and out early. The temptation seems to be too great for most people to ignore.

Tom