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Comment by somenameforme | Hacker News Reader

It's mildly interesting to consider that one of the main arguments against an economically deflationary society is that people would have a motivation to hoard money which might deter things like investment or lending, yet in an inflationary society few seem concerned about the fact that we create a system that motivates trying to hoard 'things', including land. It also motivates trying to rent things to people instead of selling it to them.

1971 is the year that we default on our obligations under Bretton Woods enabling the US to begin printing money at our own discretion. It's quite interesting to see how that year ended up being a huge inflection point for so absurdly many issues. [1] It resulted in a rapid increase in wealth, but came with a rapid increase in issues alongside it.

[1] - https://wtfhappenedin1971.com/

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It's not inflation, it's bad tax policy.

Please explain how 2x-3x housing costs in 4 years is due to tax policy.

Presumably the implication is that it's because lots of homes are being bought by real estate companies as long term investments that they may or may not even rent back out. This extra demand beyond people buying housing to, you know, live in it, drives up the price.

A different tax policy could disincentize this behavior, leading to lower demand and thus lower prices.

That's my current understanding of that perspective at least.

A 100% tax on property for those owning more than 50 properties would cause a large movement in the market. But people will say what about the value being tanked when all those houses go on the market? I say, good. The value of homes should go down. People need a place to live. Houses should not be considered an asset. You don't treat your home like an asset. You don't buy it when the market is right or sell it when it's right. You don't improve it in ways that are most likely to increase value. You live in your house. It's your place to be. Whether it's a flat, a house, or a boat in a canal, it's where you live and feel safe and spend a large chunk of time.

A tax on owning too many properties would be subject to gaming. Many large companies already hold properties in tranches of 5-10m worth of properties per limited partnership, so the tax policy needs to be written carefully to disincentivize holding empty properties in a way that can't easily be gamed.

1: ban new housing from being built

2: a supply shortage develops

3: prices rise, and we don't build more housing

I think the tax policy is prop 13, which is a handout to rich homewoners that means they will never sell their houses (very nice for them, not so for anyone trying to get new housing)

Banning house building is not related to tax policy

I take your point that I’ve never really been asked to think about inflationary economies encouraging hoarding things, especially things whose scarcity stems from natural limits rather than economic will. But at the risk of showing my naiveté—wouldn’t it be OK for me to exchange money for enough stuff for me to be content, as soon in my economic life as I can, and hold onto it? For that matter, isn’t it to my advantage that it’s economically desirable for landlords and car rental firms to let me rent a high-value item—like a car for the 3 days a year I need it, or an apartment in a city where I’m only going to live for a few years—instead of making me wait until I’ve made enough money to buy it outright before I can access it at all? Is the idea that if I could instead hoard currency of a fixed value, I would then not hoard naturally scarce things/resources that I judge likely to improve in value?

Re: [1], see also HN discussion [2] (2020, 808 points, 454 comments) wrestling with the many competing theories about “what,” if anything specific, “happened in 1971.” It raises several possibilities outside the gold standard.

See also a more substantial (or at least lengthier) methodological critique [3] (6 months ago, 40 points, 42 comments). The HN discussion includes reactions both of gold/bitcoin enthusiasts and of economically opinionated folks less committed to that way of seeing the world.

[2] https://news.ycombinator.com/item?id=25188457

[3] https://news.ycombinator.com/item?id=39144867

In the past decades there were still plenty of businesses renting things if you so desired. And, even better - they were often pretty small scale enterprises, because we hadn't yet entered the realm of corporations buying up basically everything in existence, including other businesses. Actually you made me look this up and it's kind of a neat factoid. Hertz's rent a car service started in 1918, with a dozen Model Ts! [1]

So the basic functioning of the economy would probably be unlikely to change in a really fundamental way. But I think what would change is that overall society would have a much healthier distribution of wealth/'things', with the cost being that the overall GDP and economic growth would probably be significantly slower.

[1] - https://en.wikipedia.org/wiki/Hertz_Global_Holdings#The_comp...

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