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Comment by badpun | Hacker News Reader

> What's surprising is that with all these resources made available to the world, we still have systems that allow hoarding of wealth to such a degree that most people can't afford to own a home and many can barely afford rent and food.

1. Why is that surprising? That has been a natural state of human societies from the beginning of civilization. What would be really surprising is if things changed.

2. Roughly two thirds of Americans own a home. That stands in contradiction with your claim that most Americans cannot afford to own a home.

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#2 changes a lot when you consider that roughly 70% of US household debt is mortgage debt [1] and that the price of a home is much higher (on a relative basis) than it used to be.* That is to say, most Americans have a mortgage but don't really own a home. There's a maybe subtle but important difference between saying "most Americans own a home" and "the system now allows more Americans to take out debt to mortgage a home." If you disagree, consider if you would consider circumstances no different if we created a novel debt system for people to leverage their purchase of food while food prices increase by multiples; they may even be able to get more food than previously, they just carry disproportionate debt on it.

* I think this also needs to be put in the context of houses are also bigger than they used to be, but there is also a higher percentage of two-income households.

[1] https://www.investopedia.com/personal-finance/american-debt-...

> 70% of US household debt is mortgage debt

I wonder what percentage of that was mortgage taken on an already paid off (or partly paid off) home in order to be able to buy consumer trinkets.

I've wondered the same. It seems like the norm is to use home equity as a revolving line of credit, which obviously creates some weird incentives like keeping home values inflated.

Houses are many hundreds of thousands of dollars, and not infrequently $1M or more. A big flatscreen is maybe a couple $k. We're talking orders and orders of magnitude difference. I feel this goes together with "cut back on Starbucks" type advice. These things are just rounding errors.

But home equity loans are often up to 85% of home equity. The point is inflated home prices allow people to inflate their lifestyle, regardless of what they’re spending it on. It’s about the system of revolving debt being propped up by inflated home values, not necessarily about what the debt is spent on.

I see, you're saying the loan is never paid back. Or is paid back only through more debt rolled over from something else.

Ugh. I guess that's exactly how governments fund themselves.

I don't see how a responsible person can even compete in that environment. It's like joining a sport where everyone's doping.

In this case, I don't think the revolving debt goes to governments because it's typically serviced by private entities. Rather, it's how people maintain an inflated lifestyle predicated on inflated home values.

Sure, I was only making an analogy -- people refinancing over and over, vaguely like governments pay T-bill interest by issuing more T-bills, where there's no expectation that the principal can ever really get paid back.

I was about to mention Fannie and Freddie as a footnote about how the government might be involved in all this, but didn't think it was a big deal. Yet Google tells me they end up buying 70% of mortgages. So there's some flow here that I'd do well to understand.

I believe replacing "weapons" for "systems" makes the statement more in line with concrete reality.

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