h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

Here's one for all you economists. Why is it that although high inflation is universally acknowledged as an evil, there are two things where a rise in price independent of real value, is considered desirable: stock prices and real estate.

Specifically, why is it desirable for house prices to run ahead of inflation, and pay rates, when all this does is make it impossible for people to buy houses without losing their entire disposable income to service property debt? How is this good for the economy?

"Here's one for all you economists"...

I think the history of the 20th century shows quite clearly that economists are the last people who know what's good for the economy...

And, of course, if you laid all the economists in the world end-to-end, they still wouldn't reach a conclusion.

The old ones are best

Well.. as for real estate, it's so the average person still has to rent which keeps the landlords in business, of course!

Other things besides stock prices and real estate also increase in cost such as paintings and antiques. The problem with the original posting lies in the phrase "independent of real value". Value is a perception, not a property - in other words, it is not real. Saying something is valuable is like saying that it is beautiful. You are really talking about reactions to the thing, not the thing itself.

Which comes right back to the question: how can it be seen as a good thing for property prices to escalate at such a speed as to make an ordinary three-bedroomed family house cost £250,000 in Leatherhead (to borrow that much you need an income of something over 60k) and £90,000 somewhere else?

Because the 'value' of real estate is also dependent on 'location'... The higher the RE taxes, the more you can get out of the place.

(A weird concept, but true... even though I would prefer to have my nice house somewhere where I can pay less to keep it after the loan is paid off. ;-/ )

Not really what I was getting at - my fault. The point is, in this area the price of my house has risen by nearly 100% in nine years. Few indeed are the salaries which have risen similarly (assuming the same or similar job, that is). So nine years ago a factory or shop worker could afford to live in this house, now they can't. And the perceived increase in value is illusory, because short of moving to the Midlands the only way I can realise the value of my house is to sell it, at which point I'll have to buy another similarly overpriced property.

So we are stuck in a situation where all our national income is fated to go straight to the banks. Especially now the mutual societies are being systematically raped.

Heh... Feel lucky. The only way I'm likely to get the 'value' out of mine (also about 10 years... pity... in that 10 years the principle on the loan has dropped a whopping 3K.. *sigh*) is to find some nice, discreet crook (crooks are in abundance here, but they're mostly in politics, law enforcement and other government-type businesses) to burn the place down so I can collect the insurance company's 'appraised value' ... *sigh*

Oh, to have no conscience!

Yes, bloody inconvenient thing, the conscience

So, we're all agreed, then? Revolution to overthrow the capitalist system, as soon as possible. Put an end to the oppression of the individual created by "property". That sort of thing.

Shall we meet in the pub first?

LOL!

How do we reconcile the commitment to liberate the proletariate from the shackles of property, with the equally strong commitment to converting as much beer as possible into our property?

From the barman according to his ability, to me according to my need.
(Seems reasonable enough to me...)

Well... when either of you gets drunk enough to forget a bit of arson, let me know, eh?

Arson, or arsin' about?

The big problem here is, value is measured in monetary worth, and the money itself is worthless. Economy is like religion - you have to believe it so for it to be true. If everyone stopped believeing in the value of those little green pieces of paper, economics would collapse. Banking would go out the window. The Stock market would be in the toilet.
And things would finally probably be seen at their true values.

Economics exams are the only ones where the questions are the same every year but the answers are different. (There's always a new audience!)

JZG: Uhm.. *ahem* ... *blush*

Personally I don't believe in the value of those little green pieces of paper. They've long since stopped being matched by the gold/silver in Ft. Knox (or wherever it is now -- probably in a bank in the middle of Beverly Hills in somebody else's name )... The trouble is, life seems to be quite difficult without it.

I am never trusted with pieces of green paper, so have to use plastic. Which is fine until you need a taxi in Britain. I have paid with plastic for taxis all over Europe, but in the UK they just look at you as if you were a martian if you ask whether they take plastic.

Yes, I like that