Analysis: Housing is the Big danger of the world Economy

Analysis: Housing is the Big danger of the world Economy

Housing goes against economic progress. Let us check it out.

The long-forgotten classified ads for cars, back in the 1980s, used to specify whether the auto for sale had AM/FM radio. It was worthy of note if the vehicle had a tape deck. The tape deck that would signal an ancient car today was a sign of luxurious modernity in the 1980s, stern as it is to imagine now.

Any Kessler pointed out that a monthly, $4.99 subscription to Amazon Music AMZN -1/8%, combined with your ownership of an Amazon AMZN -1.8% Echo gives you access to unlimited amounts of music worth billions of dollars. In our times, Alexa is available in cars. Nowadays, anyone can request nearly all the music ever recorded by voice command in their vehicles. Meanwhile, the well-to-do used to thrill at a tape deck that they could use to fast forward and rewind to favorite songs on one cassette tape. Kesler would quip that ‘you are a billionaire now.’

So, the question is, how did we get here? How come the luxury that was an in-car tape deck so quickly became to signify relative antiquity? Now literally anyone can command the world’s music in their car without looking or touching their stereo.

It is all about savings. John Stuart Mill said that progress is the remuneration of abstinence. Entrepreneurs’ power progress. Nevertheless, they are quite simply not entrepreneurs without access to savings. Entrepreneurs require those with means to do without, to delay consumption. Thus, they can rush the future into the present.

Housing

Entrepreneurs are explicitly able to access the resources (labor, office space, tractors, think computers, etc.) when they can access savings necessary to turn their concept into an actual market good. Entrepreneurs do not rush the future into the present. Also, they transform the future.

For example, let us take Jeff Bezos’s case. By his admission, he has spent many, many billions on failures. There was a case of the Amazon Fire smartphone. Thanks to investors who have long believed in the vision of Bezo, he has had access to the savings necessary to experiment in all manner of ways. The cylindrical echo was one of the Bezo’s experiments.

It is something that countless wise minds doubtless dismissed. That is the life of entrepreneurs. They believe deeply in what most otherwise are rejecting.

Paul La Monica, CNN markets reported, wrote that housing is an undeniable bright spot that holds up the United States economy. Housing is consumption. It is the very opposite of abstinence—nothing against putting a roof over one’s head. Nevertheless, the simple truth is that housing is not an investment. The purchase of a house is not a help for Microsoft.

The act of saving expands the capital base for entrepreneurs eager to change how we do things. Logically, the purchase of housing shrinks it. As opposed to saving when we buy a house we consume. Thus, we limit the number of resources that entrepreneurs can potentially access.

The United States dollar is weak. When it is in decline, there is a natural rush into the consumption of hard assets. Hard assets are least vulnerable to the drop of the dollar.

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