Quote:
Originally Posted by zipping
Can you expand on this. I get what you mean in regards to 10 more credit dollars for every dollar but isn't currency controlled by world markets as the free flow of capital is highly transferable. How does currency relate to property prices not seeing the link.
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It isn't about currency and forex transactions. Readily available, cheap (on the surface) bank issued credit is what has made it possible for house prices to rise exponentially. It has made it possible for anyone to buy into the market, regardless of their ability to afford the repayments now and into the future.
If the local currency was only issued by the treasury, it wouldn't be possible for irresponsible lending to occur and it would severely curtail speculative "investing" simply because the money wouldn't be there for it.