-----BEGIN PGP SIGNED MESSAGE----- To: tcmay@got.net, cypherpunks@toad.com Date: Fri Jul 26 10:53:17 1996 Tim May wrote:

So, what do we have now? Salaries are 2-4x higher, gold is at $375 an ounce, a new 3-br house averages about $100K

As a person in the process of buying a house, I see the price of mortgages in a slightly different light than just inflation. Oh, it's still inflation, no argument there. I see it mainly as a problem with debt. Back in the early sixties (which I don't remember, by the way) houses cost just slightly over what the average salary was...cars cost considerably less. Sometime right around then, there was a boom in people needing/getting credit. In fact, I'd even be willing to say it was right after WWII when all the GI's suddenly hit the civillian economy and were buying houses, and getting into college with the new-fangled GI bill. As a result of huge people getting large amounts of credit, we have become a debt ridden society. Now it takes 40% of the "husband's" monthly income to go toward housing cost, whereas it used to be the 25% rule. People don't even blink twice now when the terms of a 30 year fixed mortgage comes up. That's "just the way it's done." Now, I also see a problem with people my age (25) wanting what took their parents 30 years to get in the first 3 years out of school. (i.e. Big house, 2 or 3 cars, kids, dogs, cats, horses, stocks, etc.) It is rare now to see people buying a "starter" home and then selling it and moving on up. Why? Well in Seattle, the starter homes are in really "NASTY" areas of town. Nobody wants to live there. So, then the starter homes in "nice" areas that are bought are promptly remodelled and sold as "regular" homes. Uh, hello, doesn't mean that another "starter" home has been removed from the market. Anyway, my point is that people here aren't buying the starter homes, they are buying the bigger homes. In order to do that, they have to take bigger loans. Bigger loans mean that the cycle of debt continues. So, yes salaries are 2x to 4x higher, but there is a problem in the amount of credit being given to young people. There is something inherently wrong with the amount of our economy that deals with debt. We can't continue to purchase things on margin, or on credit. Another recession is going to come, and when it hits, it will hit HARD. At least that's my opinion. Brad -----BEGIN PGP SIGNATURE----- Version: 2.6.2 iQCVAwUBMfkGDq80j2q8tTgtAQHL4AP9EcyJ0YT9XQRz1ympFKeMX0Wo5JNOR4Z8 FA913PIRu4zkYi8/WQN4yNJh5jA5376PBVAXbW/upcNQZ+VbxXYh4T0QQPk51vPK MCHqGoVsTJpKJ+Utx7/0Wi0B6Y/TZnYaDgj9dz0TpdkH1fmyJXGi4kH+R3Y1TDoq f/i7gB5dzRQ= =rnpj -----END PGP SIGNATURE-----