BonzaiDuck
Lifer
- Jun 30, 2004
- 15,785
- 1,500
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I'm not quite sure what you mean when you say "their status-quo"
. . .
People always buy things on credit when credit is available. This goes back thousands of years. . . . .
Take for instance Proposition 13 in California.
I'm not taking a policy position about that, except to say that it was sold to voters as a solution for people on fixed incomes holding real-estate. But it was a convenient way to cap taxes on business properties.
Higher property taxes depress property values no less than higher interest rates, by depressing affordability and therefore -- demand. Demand shifts accordingly, moderating prices. I'm not making a policy judgment at this point, but the topic had been discussed over decades in conjunction with more general housing-bubble phenomena.
. . .
On the matter of credit, credit cards only came into widespread usage in the '60s. wages began to stagnate in the 70s. In the 1950s, you saved to buy a car or a durable-good appliance. Sure, there would have been "furniture stores" and dealerships offering credit, but the statistics show that as wages stagnated, people began to borrow more to compensate for declining savings rates. The level of household debt rose consistent with the stagnation of wages.