People question it all the time. And a house has obvious utility. It's also kind of a share in the city's future. It can be mispriced but it's not entirely based on hype.
I'm not talking about the houses, though. I'm talking about mortgages. Have you ever wondered why you can't just save up for a house and buy it with cash? Why do you need to first acquire this thing called a mortgage? What part is the bank actually playing in this transaction? You'll pay tax to them for 30 years but what exactly are you getting in return?
Houses are acquired in cash all the time. There is no legal requirement to tie oneself to a mortgage, if you already have the means to pay the price in full.
Practically speaking, not really. A tiny fraction of people might earn enough to save enough to buy a house, but most will be priced out at every stage by people taking mortgages. Some people inherit existing property and trade it for other property. But if you are starting from scratch it's virtually impossible. Do you know anyone who has done it?
> They're lending you the money.
Are they? If I lend you my car, I don't have access to my car during that time. But money is just made up. There's nothing moving around. Banks aren't losing anything when they lend you something. They just create a deposit and a liability and get on with it. As long as they are all doing it at roughly the same rate nothing stops the economy filling up on debt, as it has done and continues to do.
Remember, banks lending money is nothing like you or I lending money. The banks control the ledger. They don't play by the same rules as us.
Yeah, states usually do grant banks a limited right to create money. But once again, this is not based on hype. These states often have sovereignty, land, allegiance of their citizens, recognized legitimacy, police force, serviceable tax regimes, tanks, etc.
I'm not sure are about states granting banks the right to create money. Do you have a source for this? As far as I can tell they do it simply because we all use them and trust them to keep the ledger. The state (meaning, the US or UK) doesn't seem to have much control over it.
I'm making the argument or maybe just an observation that the current financial system has a basis in hard reality whereas blockchain/NFT/metaverse/digital ownership seem to break away from that.
The banks are obviously granted the limited right to create money by the government. Whether it's through regulation post facto or a charter a priori, by now virtually all modern states have a wide control over their banking systems, including setting required reserve rates.
I paid for physical goods with Bitcoin. That seemed to have a basis in hard reality too.
> by now virtually all modern states have a wide control over their banking systems
This doesn't seem to be the case.
> including setting required reserve rates.
Can you find what the required reserve rate for the US and UK is? From what I can find the US does have a required rate but it's 0% and the UK doesn't have one at all.
The reason people aren't buying a home in cash, which is not necessarily common but completely doable and not illegal or anything, is because almost no one can afford to do so. Saving for 30 years and then buying a house in cash all while paying rent somewhere in the meantime I think is pretty undesirable.
