I'm not even that optimistic. I think that would only work if they made banks pay high savings rates and slashed all taxes massively.
For perspective a 100k house currently is around 1000 a month at 30% the house would be 3k a month. You would create even more of a housing crisis. Taxes and the Fed need to be virtually removed for there to be any hope
That's what would happen if the rates were to float without a central bank. Banks wouldn't have infinite printed currency to borrow from the fed and then pass on to home buyers via loans. Instead banks would need to operate as they would in a free market: use borrower deposits as the basis for loans. However, as you know banks operate via fractional reserve thanks to infinite central bank currency and most people are jacked to the tits on debt without savings Therefore, there aren't enough deposits. How do you attract deposits? You increase your interest rates for account holders.
No force necessary. Just how free market banking works, and how it used to work before the socialist concept of central banking. It completely changes the incentives. Banks also have to manage their risk because no central bank will bail them out if they make bad loans.
The price would correct downward. The 100k house (they don't even exist anymore by the way) would be 50k or less.
Remember, people in this country mostly buy a payment. For the payment to remain the same, at 30%, the price would be slashed significantly. As it should. Because right now we have shacks and hovels selling for 2M+.
I'm not even that optimistic. I think that would only work if they made banks pay high savings rates and slashed all taxes massively.
For perspective a 100k house currently is around 1000 a month at 30% the house would be 3k a month. You would create even more of a housing crisis. Taxes and the Fed need to be virtually removed for there to be any hope
That's what would happen if the rates were to float without a central bank. Banks wouldn't have infinite printed currency to borrow from the fed and then pass on to home buyers via loans. Instead banks would need to operate as they would in a free market: use borrower deposits as the basis for loans. However, as you know banks operate via fractional reserve thanks to infinite central bank currency and most people are jacked to the tits on debt without savings Therefore, there aren't enough deposits. How do you attract deposits? You increase your interest rates for account holders.
No force necessary. Just how free market banking works, and how it used to work before the socialist concept of central banking. It completely changes the incentives. Banks also have to manage their risk because no central bank will bail them out if they make bad loans.
The price would correct downward. The 100k house (they don't even exist anymore by the way) would be 50k or less.
Remember, people in this country mostly buy a payment. For the payment to remain the same, at 30%, the price would be slashed significantly. As it should. Because right now we have shacks and hovels selling for 2M+.