The American <strike>Scheme</strike>Dream

Low interest rates, mortgage guarantees via the "private companies" Fannie Mae and Freddie Mac, and tax incentives have led to a housing market that is growing at a "significantly faster rate than the CPI":

While inflation is generally seen to transfer wealth from lenders to debtors, one thing that seems to have gone mostly unacknowledged is that inflation in the housing market results in the transfer of wealth from the young to the old and the poor to the rich, as well.

People are willing to pay inflated prices for houses because they expect the housing market to continue to grow. Even if it could continue indefinitely, every year new homebuyers have to pay interest on larger and larger loans, meaning their equity grows more slowly and potentially not at all for the first several years. People who continue to rent as home prices increase are even worse off, as they're foregoing the tax benefits and price supports that come with home ownership.

All of the incentives in place for home buyers are supposed to encourage home ownership, because homeowners make better subjectscitizens. However, the result has been and will be the transferrence of wealth from the poor to the rich. Talk about exactly the opposite of the purported intent.

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