You don’t increase your net worth by borrowing, you merely add to or create one item on your balance sheet and subtract from or delete another. That’s only rearranging the balance sheet. From David Stockman at internationalman.com:
The recent news that US home prices in December were up by 6.1% on a Y/Y basis is just one more reminder of why the Fed’s pro-inflation policies are so insidious. In essence, they set up a running battle between asset prices and wages, and the former wins hands down.
For avoidance of doubt, here is the long view on the matter:
Index of Median Home Price Versus Average Hourly Wage, 1970 to 2023
We have indexed the median sales price of homes in America and the average hourly wage to their values as of Q1 1970. That was the eve of Nixon’s plunge into pure fiat money at Camp David in August 1971 and all the resulting monetary excesses and metastases since then.
The data leaves no room for doubt. Home prices today stand at 18.2X their Q1 1970 value while average hourly wages are at only 8.7X their value of 54 years ago.
Expressed in more practical terms, the median home sales price of $23,900 in Q1 1970 represented 7,113 hours of work at the average hourly wage. Assuming a standard 2,000 hour work year, wage workers had to toil 3.6 years to pay for a median-priced home.
It is Sisyphus in the photo? (s/)
Read earlier (6hrs) that Zimbabwe is starting a gold backed currency.
Yes we can?
I kid, as that would upend the Control Grid Matrix of equal misery for all just as Bulldog Churchill said of socialist utopias.
How we some leaders like that now more than ever.