I don’t see it happening under the Democrats. They will influence the fed to keep rates low while Biden is in and continue to try and push more stimulus.
Fed chairs have always received a lot of political pressure from the ruling party. Most administrations do it quietly. Yellen was particularly cozy with the white house in her day as fed chair, which is why she is now treasury secretary.
The past three presidents haven't understood the danger of keeping rates low, but so far it has paid off for them.
If something slightly helps you but completely wrecks the whole economy after you've left office, you do it. That's the joy of anglo-style democracy...
Yes unlike to all of those other political systems that are perfectly happy to crash the system now when it hurts less, like..... I am sure we can come up with examples... any day now....
The Northern Europeans don't have the same love of bubble we do. They plan long term.
The Chinese are facing the same temptations we are now. At least some of the time they make longer term choices. I won't pretend that's always the case, but at least some of the time it is (eg the current Evergrande situation).
They have their own political issues so I'm definitely not saying we should just copy them. But their ability to plan more than 2 years ahead is a major advantage they have over us...
It can be argued that Evergrande being allowed to take on so much debt is actually evidence of Chinese officials not taking a long view on things. Presumably the pressure to pump up the GDP was so great in previous years (not unlike executives in capitalist America with their quarterly reports) that they allowed corporations to become what they currently are.
Exactly. Evergrande is simply the tip of the iceberg. There is a huge amount of bad debt in the Chinese banking system that has been hidden for various reasons and while the most obvious examples are starting to explode the big fear (for Chinese leadership as well as foreign markets) is that once the first dominos start to fall the entire rotten edifice might collapse. China was an extremely bad example to pull and to be honest was just the sort of example I was hoping someone would bring up as a contrast to 'anglo-style democracies' because it is so easy to tear apart.
We can back and forth about whether Evergrande was well managed or well regulated. I mostly agree if that helps.
But the point I was making is that when a big company goes bankrupt, at least in this case, the CCP let it happen and didn't just keep it alive on zero interest loans. That's the right decision in the long term but it's painful in the short term. That's a decision the US and UK have been unwilling to make since 2008.
No, that is not what happened. Evergrande has been kept alive by the CCP and fed zero interest loans through lax banking regulations and massive property speculation by the public. The bubble it represents should have popped in 2008 but was protected and left to fester by the Chinese government because it was politically unpopular to do so. They can no longer hide the reality of these unsustainable bad debts and so the international market is turning on it, but the CCP can't afford to prop it up either and are desperately trying to figure out a way to soften the crash. This is a long-term failure of over-building and a massive property speculation bubble that is popping; it is not an indicator of a country that is doing the right thing because it is smart in the long term, this bubble is popping because they can no longer hide the problem and the short term pain will include wiping out a large chunk of the nascent middle-class.
I'm not saying other countries don't have issues. I'm saying that the anglosphere is unusually unable to make difficult decisions. When other places have issues (financial crisis or large company bankruptcy events) they get on with them. For the last 12 years we've sat on low interest rates because no one wants the short term pain of putting them up even though that just makes it worse in the long term.
Take Ireland: big sovereign debt issue after 2008. No issue today because they got on with austerity and bounced back. Iceland (I believe) also made tough decisions (allowed bankruptcies). The Dutch aren't running their whole economy around keeping ABN Amro afloat either.
That's the issue here: everyone makes mistakes but do you take the hit and clean up or pretend it isn't a problem and just keep extending credit...
0% is fundamentally different than 1%. Modern monetary theory disagrees, but there is definitely a big difference between "cheap" and "free."
Also, I mean since 2008. Pre-2008, rates were pretty healthy, but central banks haven't had the courage to raise them back to that level. Economically speaking, we are not in a crisis, and we have not been for a long time.
For that reason exactly — Trump had to scream and pout publicly in order to keep rates down. Meanwhile, Democrats operate with much more tact & better PR.
Yeah, I am no trump supporter but found this whole affair hilarious. Federal reserve kept the interest rate near zero from 2008-2015, and only started raising them rapidly in 2016. To a neutral observer, it felt political that they didn't start raising rates in 2012, and instead started QE3 which was as big as QE1 and QE2 combined!
It is a fair opinion. If you disagree with it, then fine, say why and give reasons in the comments (like some have done).
Downvoting is for comments that detract from the conversation, not to hide a comment you disagree with. Downvoting because you disagree causes shitty Reddit like groupthink that doesn't belong here.
If you believe the premise that anyone can predict accurately that far in advance (or that the people saying it have enough influence to make it a self-fulfilling prophecy) then sure, it might still crash to levels above today.
I've expected a stock crash every year for the last 10. But not trying to time the market has meant I've enjoyed 10 years of unexpected boom. We all know a crash is coming but unless you know (not think, know) when, it's not really useful information.
The conditions in the residential real estate and mortgage markets are so much different now vs the late aughts. Lending is more conservative, appraisals are more conservative, borrowers are stronger, and there's not a glut/oversupply of new housing.
The interest rate risk is higher than it has ever been. If the long end of the yield curve climbs, mortgage rates will go up and housing values will go down, 100 bps increase could reduce prices by 20%
Out of curiosity, what proportion of monthly costs do interest payments typically make up for a mortgage holder in the US? In Switzerland they current make up 25-30% if you are in the affordability range that banks suggest, with the rest going to taxes, upkeep etc. And renting a comparable property is 50% or so more experience. So I feel like there is some slack until it starts heavily affecting the decision whether to buy or rent.
Here in Switzerland the calculation on whether you can afford a mortgage is made based on a fictional increase of interest rates to 5%, so probably the same people could still afford the same mortgages for quite a while. Prices are still insane.
I know nothing about economics, so please correct me if I'm saying something dumb.
Am I right in believing that a big housing market crash is unlikely unless there's an accompanying big stock market crash? House prices have been rising since the 2008 crisis, and any significant downturn in housing prices will be responded with people selling other assets to buy new and now-cheaper properties, thus raising house prices again.
Here in London house prices went down majorly during the first months of the 2020 pandemic, but they quickly went back up and kept raising as people tried to get discounted property.
I don’t really understand the economy. Here’s why: it’s entirely artificial. We, humans, make the rules. We control the input and if we don’t like the output we can just change that too. The market doesn’t actually exist. It’s just pieces of paper and bits on computers. A car can malfunction because it wasn’t built properly or because something breaks. A human can get sick because it gets damaged somehow. But the economy is a concept. So if we think houses are going to suddenly become worthless it’s because we think we’re going to, as a society, stop seeing value in houses…it’s not like something about houses makes them less valuable. They don’t have value in the first place except because we want them to. So…is it because banks have extracted all of the value out of other things? Banks want more money, so they suddenly say houses have no value and because of that they can beg for and receive money from the government? None of it is real…it can’t actually stop working.
It's supply and demand and many other factors. Value of houses can very easily change. To illustrate, imagine a mini-economy, where there's a village. Each person in a village has their own profession, they don't have currency, but they do trade their produce with each other. Just as an example of how a value of something can change.
Let's imagine there's 30 families or just maybe 30 people. Let's say there's also 3 people who build houses. Now they keep building and since each of those people needs a house, they are willing to give some of their produce to the builders. Now at some point, all of sudden there's 30 houses built.
If they build another house, what will be the value of this house? As all people already have a house. But this house is identical to all the other houses, shouldn't it still have similar value and shouldn't builders be getting the same? How will builders make anything of value for others to be willing to trade some of their produce?
And actually, you could in a way solve this problem if this village adopted currency of some sort. Builders could instead of asking produce which might expire in few months, ask for money and ask enough money that by building all of those 30 houses, they will be covered for life and never have to build another house.
And if it would happen that builders suddenly lost their capability to work after building 15 houses, what would happen to the values of those houses? Everyone will need a house to survive, so everyone would be willing to offer whatever they possibly can.
A reason why economy might be cyclical is that while trying to organise all the logistics of what gets built, supply, demand and all that things can tip out of balance.
And I'd like to say, whether economy is artifical, social construct, it optimises and helps organise people. Without money you'd have hard time trading, logistically, keeping track of everything. And without banks or loans you might never be able to own a house or start your business. All of these things and economy benefit the society as a whole, it's just that sometimes things can go wrong, but it doesn't mean that we are worse off after things go wrong than we would be without economy.
You can easily see from those basic and primitive examples of how economy will make life easier/better for people.
You could construct modern economy out step by step, how economy came to be and it should give you understanding on how each of those steps solved a problem, helped society grow or just benefit people and make their lives easier.
You can start on the personal level and ask a question:
1. Why can't I just exist alone in the wild? You can, but it's very possible you get injured by a wild animal, are unable to hunt for food and simply die from a very simple injury very early in your life.
2. Okay, sounds like it would be better to cooperate with people, so if one gets injured, others can help out meanwhile. Also this would allow for some part of the group to focus their time on one activity like hunting so they would get as good at it by experience as possible. Someone else in the group could deal with helping people with injuries, so they gather experience there and will be better and better as future comes along.
And so on and on... You should understand why economy is important once you have gone through all the steps.
It's not really fake, it's just mass gambling. Capitalism by speculation isn't good for society, but it's good for those who can afford to take risky bets and always come out ahead in the long run. We have an economy that values speculation above labor or property. It's not fake, it's just evil.
Tweak it so that power and wealth are continuously redistributed to the masses to a large but not huge degree, such that the difference between the haves and have nots are a factor of 10x to 100x, not billions.
Educate the hell out of everyone and reform democracy with proportional representation, more direct oversight (populism, referenda,etc.) and less monied influence (campaign finance) and lifetime appts. Embrace democratic collectivism as a healthier alternative to either militant nationalism or wild west individualism.
I don't think you can ever really get rid of capitalism because you can't ever really get rid of greed. But you can certainly can make societal rules that make hoarding shameful and illegal, not celebrated. And capitalism doesn't have to be exorbitantly speculative the way the American system is. It just has to be strongly fettered and subservient to democratic controls, not own the government.
You can absolutely get rid of the legal concept of capital. It's supported and encoded by a set of laws. Delete the laws. Whether or not this is the best approach is up for debate.
Capitalism is prevalent not just because it's codified into law, but because, I think, it plays well into innate human tribalism. Especially at the level of our elite cesspools of good ol boys.
Of course, the legal code is simply an artifact in the construction of capital, but by no means sufficient to its existence. I'll go even further and throw in the idea that human tribalism is innate is itself also a construction that can be dismantled.
Please describe how you would get rid of the concept of capital. I'm honestly curious. Isn't capital just money that has been saved and can be invested? Is the money in your savings account not "Capital"? Surely you're not proposing getting rid of money. That would be silly. Barter becomes an O(n^2) problem. I'm baffled trying to figure which specific laws could be removed to delete capital from our society. Maybe you've read some secret communist literature that lays out a plan or something. Or maybe you're defining "Capital" in a way that is nonstandard or otherwise unfamiliar.
> I'm baffled trying to figure which specific laws could be removed to delete capital from our society.
Sounds like a fantastic project filled with economic, sociological, political, and ontological questions. What's the space of categorizations and which categorizations have the most compelling explanatory power?
As an example, here's a statement[1] in the tax code which defines "capital asset." Enjoy!
I'm honestly curious how you can equitably redistribute wealth and power. Wealth and power tend to protect themselves.
Example being our current society failing to equitably tax the super rich, failing to apply justice equally to the privileged and the powerless. These trends seem to be present in every previous society I've ever heard of. The only method I've ever encountered was fictional and fanciful.
Regarding capitalism and greed.
Isn't capitalism in its simplest definition just exchanging goods and services for tokens representing value? Greed is not essential to the definition. One could sell one's goods or services for fair prices, take modest profits, pay suppliers and workers equitably. This would be defined as capitalism. No greed present. Perhaps we go wrong when we fail to create or enforce rules of fairness.
> These trends seem to be present in every previous society I've ever heard of. The only method I've ever encountered was fictional and fanciful.
It's not a binary thing. Among democratic, capitalist societies (meaning leaving out other forms of government, like China's or North Korea's), there is still a lot of variation between how much the wealthy are taxed, what social services are provided by the government, how financial markets are regulated, etc. Even within US history itself, there are stark differences between the New Deal era, the post-Reagan years, the Clinton era, etc.
You can't ever really get rid of wealth and power altogether, and I think attempts to do so generally backfire and create concentrated corruption instead (see: every failed supposedly "communist" regime ever, which became authoritarian oligarchies instead). However, you can tinker with the tax burden and social services ratios.
Thankfully, we don't have to either reinvent the wheel or toy in hypotheticals. There is a huge body of research on cross-cultural, cross-society comparisons of basic services provided by different democratic, capitalist governments (infrastructure, defense, healthcare, education)... plenty of lessons to be learned by comparing Britain, the E.U., the Nordic countries, East Asia (Japan/Taiwan especially), India, etc.
The US isn't the only capitalist democracy, but there are some things that our particular take on it are particularly bad at (campaign finance, gerrymandering, privatized healthcare, privatized pipes for electricity/internet/water/etc, time-based water rights...) and others that are very much debatable (the permissiveness of free speech, journalists' rights, government transparency, mass surveillance, religiosity, guns...)
None of that requires fundamentally changing capitalism, just tweaking the regulations here and there to impact the wealthy more than the middle-lower classes (sometimes as asked for by the wealthy themselves, in the case of Buffet or Gates' calls for increased taxation).
Maybe no modern democratic, capitalist society is perfect, but some of them have solved problems better than we have (with tradeoffs, of course)... I think the most common tradeoff is that a society produces fewer extremely profitable companies & billionaires, but often the average citizen has a better quality of life (measured by life expectancy at age X, level of education, accessibility to basic services, amount of free time, disposable income on a PPP basis, consumer protections, ratio of governors to the governed, etc.) The USA is just heavily pro-billionnaire to a level that's detrimental to the rest of society. That's not inherent to capitalism necessarily, just unfettered (loosely regulated) capitalism.
> Isn't capitalism in its simplest definition just exchanging goods and services for tokens representing value?
I am not an economist, but I'll try to provide a semi-informed take. Someone please correct me if I'm wrong. AFAIK what you're describing is more the definition of a currency (and a market, in a broader sense). A market alone doesn't make capitalism. You can have a tokenized exchange of goods & services (i.e. a non-barter-based economy) in other socioeconomic systems too, whether monarchies or feudalism or fascism or authoritarian-distributive societies like China (as distinct from post-statehood communism). You can also have alternative currencies at a local level like time banks (an hour of my time for an hour of yours, rather than $s in between) and alternative local currencies (money that can only be spent within a local township/county, usually used alongside USD but at a favored exchange ratio when you "keep it local"). And of course crypto.
What differentiates "capitalism" is the differentiation of "capital" from "currency". Fundamentally, it isn't about the means of exchange (whether you trade a hors...
Much of economic behavior and dysfunction comes from our poor ability to scale socially past the Dunbar limit. When we can keep up with everyone, we have a little accountant in our head saying who to assign credit or blame to, so our transactions happen without much physical manifestation.
Once you get bigger than a small village you have to believe in the system. The system is, throughout history, a hierarchy, and the hierarchy is defined by an overarching mythology of who or what is good and pure - the religion, nation, etc. - followed by division into ranks and groups. Business and finance becomes part of this system as a mechanism to offload credit and facilitate market exchange. While business and finance can be studied in a technical sense, the way in which humans ultimately use it is socially driven, and market norms vary widely between countries. It's an enormously inexact system the way we have it, because some groups define the rules and others are enforced-upon. That dysfunction lies at the heart of why economies crash, since that allows the elite to live in a Disney fantasy for a while, at least until the rails run out. They can "afford" to ignore society's limits and set up the game to benefit them as long as their status remains in place, and likewise people want to look up to elites as the system in manifest, which is why we have so much fan worship and a sense of national competition.
And so the value of money tends to revolve mostly around the overall validation of the hierarchy as it stands; break that and you break a country. This is a major part of why cryptocurrency incites strong reactions; the beliefs it validates are all premised around consent to some communally defined principle of value(with Bitcoin being an direct extrapolation of labor theory of property to computing resources), and don't have the with-us-or-against-us-by-force qualities of a national currency. That pulls it out of the competing-hierarchies framework in a disconcerting way; there's no leader to assassinate, no bureaucracy to infiltrate. You can, of course, rush in to corner the market that is already there, squash competition and attempt to enforce your preferred hierarchy by dictating the development process - and that is the thing being done at present - but the jury is out on whether controlling it is really possible or if it's going to slip through iron fists like so much sand.
My 2 cents, the German housing market has way stronger fundamentals and the income-to-price ratio is more reasonable.
Key factors in my opinion are:
- More people live in appartments their whole lives
- A lot of people have low salaries so they choose to live in or buy an appartment instead of a home
- Financially insecure people can't help bid up prices with ridiculous mortgages as happens in the US/Canada.
- I also think there is much less foreign money here.
- A lot of people inherit here as well, so they don't have to buy a new home
- Population dynamics mean less demand, versus massive immigration in North America (which is focused on key cities)
I think the German market has less "upside" if you are an investor but also less risk.
If you are looking for a home for your family, Germany is a large decentralized country. There are tons of nice places to live for a reasonable price near cities where you can get good jobs.
Düsseldorf, Berlin, Köln, Frankfurt, Mannheim, Stuttgart, Hamburg etc.
This diversity takes pressure off of a few economically dominant cities i.e. Toronto, New York, bay area.
Of course, I wouldn't base my decision to live in Germany based on economics, unless you are a German. The housing market, is probably the least important difference I would consider between Anglosphere and Germany.
49 comments
[ 3.0 ms ] story [ 136 ms ] threadSomething no Democratic President (or other Republican President, for that matter) has ever done.
The past three presidents haven't understood the danger of keeping rates low, but so far it has paid off for them.
The Chinese are facing the same temptations we are now. At least some of the time they make longer term choices. I won't pretend that's always the case, but at least some of the time it is (eg the current Evergrande situation).
They have their own political issues so I'm definitely not saying we should just copy them. But their ability to plan more than 2 years ahead is a major advantage they have over us...
But the point I was making is that when a big company goes bankrupt, at least in this case, the CCP let it happen and didn't just keep it alive on zero interest loans. That's the right decision in the long term but it's painful in the short term. That's a decision the US and UK have been unwilling to make since 2008.
And of course Sweden had a major financial crisis in the mid-1990s.
Take Ireland: big sovereign debt issue after 2008. No issue today because they got on with austerity and bounced back. Iceland (I believe) also made tough decisions (allowed bankruptcies). The Dutch aren't running their whole economy around keeping ABN Amro afloat either.
That's the issue here: everyone makes mistakes but do you take the hit and clean up or pretend it isn't a problem and just keep extending credit...
Also, I mean since 2008. Pre-2008, rates were pretty healthy, but central banks haven't had the courage to raise them back to that level. Economically speaking, we are not in a crisis, and we have not been for a long time.
It is a fair opinion. If you disagree with it, then fine, say why and give reasons in the comments (like some have done).
Downvoting is for comments that detract from the conversation, not to hide a comment you disagree with. Downvoting because you disagree causes shitty Reddit like groupthink that doesn't belong here.
Have these executives shorted the housing market?
Am I right in believing that a big housing market crash is unlikely unless there's an accompanying big stock market crash? House prices have been rising since the 2008 crisis, and any significant downturn in housing prices will be responded with people selling other assets to buy new and now-cheaper properties, thus raising house prices again.
Here in London house prices went down majorly during the first months of the 2020 pandemic, but they quickly went back up and kept raising as people tried to get discounted property.
Let's imagine there's 30 families or just maybe 30 people. Let's say there's also 3 people who build houses. Now they keep building and since each of those people needs a house, they are willing to give some of their produce to the builders. Now at some point, all of sudden there's 30 houses built.
If they build another house, what will be the value of this house? As all people already have a house. But this house is identical to all the other houses, shouldn't it still have similar value and shouldn't builders be getting the same? How will builders make anything of value for others to be willing to trade some of their produce?
And actually, you could in a way solve this problem if this village adopted currency of some sort. Builders could instead of asking produce which might expire in few months, ask for money and ask enough money that by building all of those 30 houses, they will be covered for life and never have to build another house.
And if it would happen that builders suddenly lost their capability to work after building 15 houses, what would happen to the values of those houses? Everyone will need a house to survive, so everyone would be willing to offer whatever they possibly can.
A reason why economy might be cyclical is that while trying to organise all the logistics of what gets built, supply, demand and all that things can tip out of balance.
And I'd like to say, whether economy is artifical, social construct, it optimises and helps organise people. Without money you'd have hard time trading, logistically, keeping track of everything. And without banks or loans you might never be able to own a house or start your business. All of these things and economy benefit the society as a whole, it's just that sometimes things can go wrong, but it doesn't mean that we are worse off after things go wrong than we would be without economy.
You can easily see from those basic and primitive examples of how economy will make life easier/better for people.
You could construct modern economy out step by step, how economy came to be and it should give you understanding on how each of those steps solved a problem, helped society grow or just benefit people and make their lives easier.
You can start on the personal level and ask a question:
1. Why can't I just exist alone in the wild? You can, but it's very possible you get injured by a wild animal, are unable to hunt for food and simply die from a very simple injury very early in your life.
2. Okay, sounds like it would be better to cooperate with people, so if one gets injured, others can help out meanwhile. Also this would allow for some part of the group to focus their time on one activity like hunting so they would get as good at it by experience as possible. Someone else in the group could deal with helping people with injuries, so they gather experience there and will be better and better as future comes along.
And so on and on... You should understand why economy is important once you have gone through all the steps.
Educate the hell out of everyone and reform democracy with proportional representation, more direct oversight (populism, referenda,etc.) and less monied influence (campaign finance) and lifetime appts. Embrace democratic collectivism as a healthier alternative to either militant nationalism or wild west individualism.
I don't think you can ever really get rid of capitalism because you can't ever really get rid of greed. But you can certainly can make societal rules that make hoarding shameful and illegal, not celebrated. And capitalism doesn't have to be exorbitantly speculative the way the American system is. It just has to be strongly fettered and subservient to democratic controls, not own the government.
Sounds like a fantastic project filled with economic, sociological, political, and ontological questions. What's the space of categorizations and which categorizations have the most compelling explanatory power?
As an example, here's a statement[1] in the tax code which defines "capital asset." Enjoy!
[1] https://www.law.cornell.edu/uscode/text/26/1221#a
Regarding capitalism and greed. Isn't capitalism in its simplest definition just exchanging goods and services for tokens representing value? Greed is not essential to the definition. One could sell one's goods or services for fair prices, take modest profits, pay suppliers and workers equitably. This would be defined as capitalism. No greed present. Perhaps we go wrong when we fail to create or enforce rules of fairness.
It's not a binary thing. Among democratic, capitalist societies (meaning leaving out other forms of government, like China's or North Korea's), there is still a lot of variation between how much the wealthy are taxed, what social services are provided by the government, how financial markets are regulated, etc. Even within US history itself, there are stark differences between the New Deal era, the post-Reagan years, the Clinton era, etc.
You can't ever really get rid of wealth and power altogether, and I think attempts to do so generally backfire and create concentrated corruption instead (see: every failed supposedly "communist" regime ever, which became authoritarian oligarchies instead). However, you can tinker with the tax burden and social services ratios.
Thankfully, we don't have to either reinvent the wheel or toy in hypotheticals. There is a huge body of research on cross-cultural, cross-society comparisons of basic services provided by different democratic, capitalist governments (infrastructure, defense, healthcare, education)... plenty of lessons to be learned by comparing Britain, the E.U., the Nordic countries, East Asia (Japan/Taiwan especially), India, etc.
The US isn't the only capitalist democracy, but there are some things that our particular take on it are particularly bad at (campaign finance, gerrymandering, privatized healthcare, privatized pipes for electricity/internet/water/etc, time-based water rights...) and others that are very much debatable (the permissiveness of free speech, journalists' rights, government transparency, mass surveillance, religiosity, guns...)
None of that requires fundamentally changing capitalism, just tweaking the regulations here and there to impact the wealthy more than the middle-lower classes (sometimes as asked for by the wealthy themselves, in the case of Buffet or Gates' calls for increased taxation).
Maybe no modern democratic, capitalist society is perfect, but some of them have solved problems better than we have (with tradeoffs, of course)... I think the most common tradeoff is that a society produces fewer extremely profitable companies & billionaires, but often the average citizen has a better quality of life (measured by life expectancy at age X, level of education, accessibility to basic services, amount of free time, disposable income on a PPP basis, consumer protections, ratio of governors to the governed, etc.) The USA is just heavily pro-billionnaire to a level that's detrimental to the rest of society. That's not inherent to capitalism necessarily, just unfettered (loosely regulated) capitalism.
> Isn't capitalism in its simplest definition just exchanging goods and services for tokens representing value?
I am not an economist, but I'll try to provide a semi-informed take. Someone please correct me if I'm wrong. AFAIK what you're describing is more the definition of a currency (and a market, in a broader sense). A market alone doesn't make capitalism. You can have a tokenized exchange of goods & services (i.e. a non-barter-based economy) in other socioeconomic systems too, whether monarchies or feudalism or fascism or authoritarian-distributive societies like China (as distinct from post-statehood communism). You can also have alternative currencies at a local level like time banks (an hour of my time for an hour of yours, rather than $s in between) and alternative local currencies (money that can only be spent within a local township/county, usually used alongside USD but at a favored exchange ratio when you "keep it local"). And of course crypto.
What differentiates "capitalism" is the differentiation of "capital" from "currency". Fundamentally, it isn't about the means of exchange (whether you trade a hors...
Once you get bigger than a small village you have to believe in the system. The system is, throughout history, a hierarchy, and the hierarchy is defined by an overarching mythology of who or what is good and pure - the religion, nation, etc. - followed by division into ranks and groups. Business and finance becomes part of this system as a mechanism to offload credit and facilitate market exchange. While business and finance can be studied in a technical sense, the way in which humans ultimately use it is socially driven, and market norms vary widely between countries. It's an enormously inexact system the way we have it, because some groups define the rules and others are enforced-upon. That dysfunction lies at the heart of why economies crash, since that allows the elite to live in a Disney fantasy for a while, at least until the rails run out. They can "afford" to ignore society's limits and set up the game to benefit them as long as their status remains in place, and likewise people want to look up to elites as the system in manifest, which is why we have so much fan worship and a sense of national competition.
And so the value of money tends to revolve mostly around the overall validation of the hierarchy as it stands; break that and you break a country. This is a major part of why cryptocurrency incites strong reactions; the beliefs it validates are all premised around consent to some communally defined principle of value(with Bitcoin being an direct extrapolation of labor theory of property to computing resources), and don't have the with-us-or-against-us-by-force qualities of a national currency. That pulls it out of the competing-hierarchies framework in a disconcerting way; there's no leader to assassinate, no bureaucracy to infiltrate. You can, of course, rush in to corner the market that is already there, squash competition and attempt to enforce your preferred hierarchy by dictating the development process - and that is the thing being done at present - but the jury is out on whether controlling it is really possible or if it's going to slip through iron fists like so much sand.
Key factors in my opinion are:
- More people live in appartments their whole lives
- A lot of people have low salaries so they choose to live in or buy an appartment instead of a home
- Financially insecure people can't help bid up prices with ridiculous mortgages as happens in the US/Canada.
- I also think there is much less foreign money here.
- A lot of people inherit here as well, so they don't have to buy a new home
- Population dynamics mean less demand, versus massive immigration in North America (which is focused on key cities)
I think the German market has less "upside" if you are an investor but also less risk.
If you are looking for a home for your family, Germany is a large decentralized country. There are tons of nice places to live for a reasonable price near cities where you can get good jobs.
Düsseldorf, Berlin, Köln, Frankfurt, Mannheim, Stuttgart, Hamburg etc.
This diversity takes pressure off of a few economically dominant cities i.e. Toronto, New York, bay area.
Of course, I wouldn't base my decision to live in Germany based on economics, unless you are a German. The housing market, is probably the least important difference I would consider between Anglosphere and Germany.