Tuesday, April 10, 2018

Deflation from housing

Beware mother of all deflations

USA opinion piece with UK as case study. Until 1982 mortgages were supplied by building societies. Building societies were -not- granted the same privilege to create credit/money so finance availability was limited. After 1982 the banks, capable of creating loans ex nihilo got into the market, valuations became circular on lending, and the only limit to price increases was(is) how much debt can be sustained leading to 2008, debts can't grow, process goes into reverse ->massive government intervention.

Posted by stillthinking @ 09:33 AM (2832 views)
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One thought on “Deflation from housing

  • Dangerousbob says:

    Of course, the Thatcherite apologist would say private debt ‘took off’ in 1982 as a result of the ‘great property owning democracy’, and thus individuals were not taking on more debts, but rather instead more individuals were taking on debts.

    However, the figures are clear. There was no specifically Thatcherite 1980s property owning democracy’ Homeownership/Owner occupier rates increased steadily from the end of WW2 on. Indeed, the fastest increase in private homeownership in the UK was the decade 1961-1971. 1971-1981 and 1981-1991 logged broadly similar rates of increase.

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