So-called affordable "mortgages"

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kmarinas86's picture
kmarinas86
Status: Silver Member (Offline)
Joined: Dec 29 2008
Posts: 164
So-called affordable "mortgages"

We speak of "so-called afforable housing" when we should really be saying "so-called affordable mortgages".

The truth is that the builder is paid on the spot for building the house, not over 30 year period as would be possible from a state owned and operated housing industry that would collect annual revenue in proportion to the value of property determined by private authorities. The current mire, however, does not serve the need for sums from a vast existing reserve of cash to be transferred quickly to the builder. Homeowners simply don't have that kind of cash on the spot, thus money is borrowed from the banking system, which has its roots with the phony "Federal" "Reserve".

This situation cannot possibly be money supply neutral, if we are to increase the account of the seller immedately, while reducing the account of the buyer slower, over a longer period of time. The only way out of having to increase the money supply to do this is to have a state owned housing franchiser whose sold purpose is to sponsor franchisees with (former housing authorities and builders) to make new housing a reality. The difference is that these now franchises will not work with each other but will try to surpass each other, just as they used to do, a concept allow for the level of control found in entrepreneurship, with the cookie-cutter backbone and economics of scale found in a typical franchise.

A state has the way of doing this by the collection of taxes and rents in ways that do not require interest. Yet these rents can go to a collective pool that can pay for new housing the moment it is produced! This is not possible with a small builder independent of the government because one must otherwise wait a long time before it is paid back (for 30-year mortages). As a result, the mortgages are more unafforable than the houses themselves. A small builder must undergo activities which will increase the money supply to achieve these objectives.

However, by prohibiting mortgages entirely, an annual property tax of 1/30th of the total value of the home would be sufficent for new housing equivalent to 3.33% of the number of houses taxed. For a new housing of equivalent to 2% of current housing, the rate would be 1/50th the value of a home. Once enough housing is produced, the rate falls to zero. So when there is no new houses being built for an extended period of time, then NO ONE IN THE COUNTRY would owe any house payments until the next time houses are built again!

Creativity and flexibility of housing will not be limited however. Individual and Small Business builders will still exist in the housing industry and will serve as franchisees. The same conversion to franchisation would apply to housing authorities and builders that are currently "incorporated".

eb_riesling's picture
eb_riesling
Status: Bronze Member (Offline)
Joined: Oct 28 2008
Posts: 53
Re: So-called affordable "mortgages"

KMarinas86,

I appreciate your thoughts but this sounds way too much like communism.  It did not work in the past it will not work in the future.  Whether it be housing or industry state directed economies never work! 

 

Where is it written that all are entitled to home ownership?  People should work for what they have.  If this means it takes a lot longer to save up for a sizable down-payment before a bank lends a mortgage then so be it.  If you cant afford to own a home then rent.  Most people in Germany rent. 

The current problem is not that lending is bad it is the way we have been doing it that's bad.

 

E

 

kmarinas86's picture
kmarinas86
Status: Silver Member (Offline)
Joined: Dec 29 2008
Posts: 164
Re: So-called affordable "mortgages"

KMarinas86,

I appreciate your thoughts but this sounds way too much like
communism. It did not work in the past it will not work in the
future. Whether it be housing or industry state directed economies
never work!

It does "sound" like communism. But there are several reasons why it isn't communism:

The government sets up a franchiser. In a sense, the "franchiser" is not really part government, because it would only control the operation to the extent that a franchiser controls its franchisees (similar to how grocery chains and food stores are operated hierarchally). The "franchisees" in this case however would be homeowner associations and builders and they would compete in the market with their own brands, and thus competition would exist (unlike the non-existence of competition between two Burger Kings which (obviously) sit under the same franchiser). The purpose of this is only to avoid having to issue money to pay for new housing. The one of the largerst reasons for a ballooning debt is the growth of housing, since there are not even close to enough deposits at any given time for enough people to pay their house 100% downpayment .

Where is it written that all are entitled to home ownership? People
should work for what they have. If this means it takes a lot longer to
save up for a sizable down-payment before a bank lends a mortgage then
so be it. If you cant afford to own a home then rent. Most people in
Germany rent.

Well, that is just status quo. Home ownership means you are entitled to keep trespassers away, away from taking advantage of your property.. There are good ideas out their right now, but the mathematical truth is that if everybody lived below their means (both individuals and firms domestic and abroad) then a lot of what is produced goes to waste. When things have to be consumed to make economic sense for its production, those who gain in savings necessitate the existence of those who lose their savings. The only way for every bank account to increase 5% a year is to increase the money supply, which gains nothing (except liquidity). The system of compouding interest on our money supply and economy is questioned largely due to the gross distrubance it has on those who are just "getting by". This questioning is not unjusfiable. The only reason the system is still supportable is that it is the only established means enabling that level of liquidity necessary to keep people employed.

The current problem is not that lending is bad it is the way we have been doing it that's bad.

When it boils down to it, the size of the problem get larger and larger already, when you see the system as being inherently deficent. Such suspicions are the very premise on which sites like these are created.

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