Why housing costs are so ridiculously high

**Edbear** · 8th February 2015, 17:45

Crocs, apples, easy mistake to make.

**bogan** · 8th February 2015, 17:48

Originally Posted by nodrog

Fuck you're a dick, cant you read? They are made from crocodiles.

Crikey!

**pritch** · 8th February 2015, 17:56

Originally Posted by flyingcrocodile46

It's the peoples fault. They remain ignorant out of choice and effectively sanction everything wrong when they remain silent. Bankers do what bankers do because the people allow it. It's your fault. You and your apathy.

I might be more convinced of your grasp of economic theory if you could demonstrate you knew how to use an apostrophe.

**Winston001** · 8th February 2015, 18:05

Originally Posted by flyingcrocodile46

Because banks make electronic money out of thin air and create inflation in speculative areas such as housing so they can make profits. True story, but don't believe me. Watch and learn.

What I can't understand is, if banks make money out of thin air, why do banks still go broke? That should be impossible.

**Woodman** · 8th February 2015, 18:07

Is he comparing apples with apples or apples with houses, or maybe houses with apple trees. Does a house with an apple tree cost more or does it go up in value because the bankers own the apples, but not the houses.

**yokel** · 8th February 2015, 18:27

Originally Posted by Winston001

What I can't understand is, if banks make money out of thin air, why do banks still go broke? That should be impossible.

there is actually something in that thin air, that is government bonds that are IOU's that are backed by the people(you) and land of the government.

I've just had some old poms buy the house next door, so that drives the price up, also the parents helping to pay for their kids house is only going to drive up the house prises even more.
the real problem is why cant young people to get into their own home on their own?
looks to me that the banks want mortgages secured with a nice fat wad of cash from the parents,
the real problem begins when the cash come from one side of the family when the "nice young couple" part ways.

http://www.stuff.co.nz/life-style/ho...w-a-home-truth

**jasonu** · 8th February 2015, 18:34

Originally Posted by yokel

there is actually something in that thin air, that is government bonds that are IOU's that are backed by the people(you) and land of the government.

I've just had some old poms buy the house next door, so that drives the price up, also the parents helping to pay for their kids house is only going to drive up the house prises even more.
the real problem is why cant young people to get into their own home on their own?
looks to me that the banks want mortgages secured with a nice fat wad of cash from the parents,
the real problem begins when the cash come from one side of the family when the "nice young couple" part ways.

http://www.stuff.co.nz/life-style/ho...w-a-home-truth

I would have thought Pommies moving in next door would drive prices (not to mention the tone of the neighborhood) down not up.

**mashman** · 8th February 2015, 18:36

Originally Posted by yokel

there is actually something in that thin air, that is government bonds that are IOU's that are backed by the people(you) and land of the government.

Is the govt bond tree the one next to the invisible money tree?

**Mike.Gayner** · 8th February 2015, 18:41

Originally Posted by Winston001

What I can't understand is, if banks make money out of thin air, why do banks still go broke? That should be impossible.

Banks don't actually create money, there is a thing called fractional reserve. It's not nearly as scary as the idiot who created this thread thinks.

Here's a way of looking at it:

You have $100,000 in savings that you put into the bank. On your balance sheet now you have a $100,000 cash asset (e.g. cash you have access to any time you want it)
The bank's balance sheet is now a $100,000 credit (liability), cash it owes you. It also has a $100,000 debit (asset), being cash in its own accounts.
Now I come into the bank and ask to borrow $50,000. No problem, because the bank has your $100k in cash sitting in its trading account. The bank lends me $50k, keeping the other $50k in its trading account as a "reserve". Governments mandate how much reserve the bank has to keep. The bank's balance sheet is now $100k liability (your deposit), $50k debit cash reserve, $50k debit loan assets.

The effect of this really is that the bank created money. Just because the bank lent me $50k doesn't affect your $100k deposit as far as you're concerned. So the system started with just $100k in it, and it now has $150k - your $100k plus my $50k. Banks don't literally have authority to create money - the government decides how much reserve banks need, and they can't just create money. Only the reserve bank can print money, and it does so by issuing debt to the government.

The system is simple enough to grasp, but complex enough to make it challenging to fully understand. Most people here have the brain capacity to understand this system if they chose to. The moron who started this thread lacks that brainpower, and the unfortunate side effect is that he ironically thinks he's smarter than everyone else.

**mashman** · 8th February 2015, 18:53

Originally Posted by Mike.Gayner

Banks don't actually create money, there is a thing called fractional reserve. It's not nearly as scary as the idiot who created this thread thinks.

Here's a way of looking at it:

You have $100,000 in savings that you put into the bank. On your balance sheet now you have a $100,000 cash asset (e.g. cash you have access to any time you want it)
The bank's balance sheet is now a $100,000 credit (liability), cash it owes you. It also has a $100,000 debit (asset), being cash in its own accounts.
Now I come into the bank and ask to borrow $50,000. No problem, because the bank has your $100k in cash sitting in its trading account. The bank lends me $50k, keeping the other $50k in its trading account as a "reserve". Governments mandate how much reserve the bank has to keep. The bank's balance sheet is now $100k liability (your deposit), $50k debit cash reserve, $50k debit loan assets.

The effect of this really is that the bank created money. Just because the bank lent me $50k doesn't affect your $100k deposit as far as you're concerned. So the system started with just $100k in it, and it now has $150k - your $100k plus my $50k. Banks don't literally have authority to create money - the government decides how much reserve banks need, and they can't just create money. Only the reserve bank can print money, and it does so by issuing debt to the government.

The system is simple enough to grasp, but complex enough to make it challenging to fully understand. Most people here have the brain capacity to understand this system if they chose to. The moron who started this thread lacks that brainpower, and the unfortunate side effect is that he ironically thinks he's smarter than everyone else.

Commercial banks have absolute authority to create "money".

**sidecar bob** · 8th February 2015, 18:54

I'm prepared to bet half a dozen apples that the OP rents a house & doesn't own any property.
It just seems to fit really.
I'm not fucked off with the property values at all & trying to dream up a conspiracy about why I can't afford a house.

**Swoop** · 8th February 2015, 18:55

Originally Posted by jasonu

But why are the banks buying apples?

It's a conspiracy...

**flyingcrocodile46** · 8th February 2015, 19:07

.

Originally Posted by Mike.Gayner

Banks don't actually create money, there is a thing called fractional reserve. It's not nearly as scary as the idiot who created this thread thinks.

Here's a way of looking at it:

You have $100,000 in savings that you put into the bank. On your balance sheet now you have a $100,000 cash asset (e.g. cash you have access to any time you want it)
The bank's balance sheet is now a $100,000 credit (liability), cash it owes you. It also has a $100,000 debit (asset), being cash in its own accounts.
Now I come into the bank and ask to borrow $50,000. No problem, because the bank has your $100k in cash sitting in its trading account. The bank lends me $50k, keeping the other $50k in its trading account as a "reserve". Governments mandate how much reserve the bank has to keep. The bank's balance sheet is now $100k liability (your deposit), $50k debit cash reserve, $50k debit loan assets.

The effect of this really is that the bank created money. Just because the bank lent me $50k doesn't affect your $100k deposit as far as you're concerned. So the system started with just $100k in it, and it now has $150k - your $100k plus my $50k. Banks don't literally have authority to create money - the government decides how much reserve banks need, and they can't just create money. Only the reserve bank can print money, and it does so by issuing debt to the government.

The system is simple enough to grasp, but complex enough to make it challenging to fully understand. Most people here have the brain capacity to understand this system if they chose to. The moron who started this thread lacks that brainpower, and the unfortunate side effect is that he ironically thinks he's smarter than everyone else.

Well gee whiz. Classic pot calling the kettle black. It is apparent that you fail to realise that "fractional reserve banking" and the depositor funds that it revolves around isn't the full extent of banking duplicity. Central banks do indeed create money out of nothing and they decide where they are going to introduce it into the market. You only have to check the recent headlines about the ECB issuing another trillion euros or the Fed which up until a few months back were inventing it at a rate of up to 85 $billion a month. Pull your head out.

Fractional reserve banking is only a small part of the fraud. It has nothing to do with the issuing of new money via quantitative easing. "Money creation".

If you honestly want to start to develop an understanding of where money comes from and the extent of central bank manipulation, watch this recording of the recent Money Creation & Society' Debate in UK Parliament. At least some politicians somewhere understand the problem.

Yes it's a long video and full of interruptions (it is a parliamentary debate after all). But few things worth learning take only a few minutes. You have to put time into your education about world affairs (not through mainstream media disinformation though) if you really want to know the truths out there.