this post was submitted on 15 Jun 2024
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World Economic Forum: "You will own nothing and you will be happy" (lemmy.ml)
submitted 5 months ago* (last edited 5 months ago) by Confidant6198@lemmy.ml to c/personalfinance@lemmy.ml
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[–] TheOubliette@lemmy.ml 33 points 5 months ago (2 children)

This is from 2018. It is basically the "huffing your own farts" version of bringing back the company town but this time it's neoliberal.

It's still relevant, though, because the economic forces that be were already doing this and have gained ground. For example, the transition from being able to own a home vs. renting your entire life. Included in that is the fact that people who "own" their home are often incorrect about this. In reality, the home was purchased in a loan and you are now paying a bank economic rent (interest) for the privilege. Over time we see the shifts: more people have to rent, they have to rent for longer, and loan terms and worse and worse.

[–] shortwavesurfer@monero.town 7 points 5 months ago (1 children)

On the other hand, though, your rent stays fairly steady while inflation increases and therefore makes your payment less and less over time.

[–] TheOubliette@lemmy.ml 8 points 5 months ago* (last edited 5 months ago) (1 children)

Inflation is just the cost of buying goods and services (edit: going up). Rent can easily increase at the same time as inflation, being itself a part of inflation. In the US, rent prices have risen faster than inflation for decades.

From a working class perspective, inflation is good for personal debt, all else holding constant (and with wages keeping up with inflation). The amount you have to pay back gets cut by the inflation rate, essentially.

[–] shortwavesurfer@monero.town 3 points 5 months ago (1 children)

Right, you just have to make sure to put your savings in a different currency that is not inflating. Otherwise, at the same time that your things are coming down due to inflation eating away the value, your savings are also coming down because of that same process, which is not good.

[–] TheOubliette@lemmy.ml 1 points 5 months ago

Yes, absolutely. It is beneficial, at a personal level, to have inflation hedges like this. When one is fortunate enough to have the means, it is good to have diversified holdings that guard against inflation, and naturally, hyperinflation. Having some gold is a clasilaic strategy and it is honestly not a bad idea for hedging against inflation. It's not a sure thing investment by any means, but you will probably be able to sell it to buy a plan ticket out of Dodge of things get bad enough.

Another good thing to participate in is the building of mutual aid networks. They constitute a network of people with various useful skills for sustaining life and community even in difficult situations. They will more effectively distribute resources in the case of emergency and can consitute and alternative form of governance if and when there is no practical alternative.

[–] Taleya@aussie.zone 5 points 5 months ago (1 children)

What is incorrect are claims the bank owns the house.

The bank does not. A mortgage is a debt on the property, or if you like, a debt with the house as collateral. While this gives the bank certain rights while the mortgage is still extant (if sold they will be repaid, etc, if the debt is not paid the house is taken In recompense), they do. Not. Own. The. House. They have zero ownership. The house belongs to those on the title.

I really hate the 'banks owns the house' mentality, it's not true and this weird transferral of power to 'another landlord' is putting the collar around your own neck and ceding power for no reason

[–] TheOubliette@lemmy.ml 0 points 5 months ago (1 children)

Like I said, the house is bought on debt issued by a bank. You are not actually a full owner in that you are no longer paying rent for housing. You are paying economic rent in the form of interest to the bank in order to buy the house. The usual term of this agreement is 30 years in the US. The only way to avoid this is to already be so rich that you can buy with cash, which excludes nearly everyone under the age of 50.

Fiscal propaganda usually holds that you are gaining equity, so there's no rent. They even substitute hand-wavy estimates when accounting for housing costs in economic statistics rather than measure what is paid over sticker price. But you will pay a large quantity of money to the bank for the privilege of buying the house and until you have paid off the loan, you are constantly at risk of foreclosure should you be unable to make payments. Just like... rent.

So there is rent in the form of economic rent (debt interest) and there is the rent-like behavior of needing to make regular payments or lose your housing.

Many people are surprised to learn how financially trapped they are by their attempt to gain housing security. This is because they do not expect the financial system to continue to exert quite as much control and for so long, nor for the real price tag to, with compound interest, be often double or triple the sticker price. And that certainly makes many feel, validly, like they don't really own the home.

[–] Taleya@aussie.zone 3 points 5 months ago* (last edited 5 months ago) (1 children)

...no. I mean, you can have your feels on home ownership being a fiduciary trap, but don't try to present them as fact.

[–] TheOubliette@lemmy.ml 1 points 5 months ago (1 children)

Feel free to point out what I've said that is actually incorrect.

[–] Taleya@aussie.zone 5 points 5 months ago (1 children)

  • repaying a loan is not 'rent-like behaviour', applying a brush that broad would paint any regular payment as 'rent-like behaviour', which is preposterous.

  • 'Economic rent' is a meaningless phrase, especially in this context. Rent is a concept of lease without ownership. We are literally talking about owning property. There is no rent. There is debt and burden, sure, but there is no rent.

  • Equity is not a lie. It's the very simple concept of a property's worth after deduction of amounts owing. Now the nuances and application has gotten insanely out of control in miltiple countries (I'm Australian, ask me about our multigenerational housing inequities!) But the basic idea of inflation increasing cost/value is generally sound.

A rental property and a ppr are nowhere near each other, not financially, socially or emotionally. They cannot be equated, no matter how much you torture the syntax. Each has their place for personal preference, but they are not the same

[–] TheOubliette@lemmy.ml 1 points 5 months ago (1 children)

repaying a loan is not 'rent-like behaviour', applying a brush that broad would paint any regular payment as 'rent-like behaviour', which is preposterous.

I'm not being broad, I'm specifically talking about what it takes to "own" a house for the vast majority of people on this website. In order to do so, you must enter into an arrangement with a bank wherein in order to have housing, a basic necessity, you must provide monthly payment, half or more of which goes directly to the bank as interest. If you do not make the payments in a timely manner, you lose your housing.

People looking to buy rather than rent are usually interested in housing security, in actually owning the place they live, rather than having to regularly pay someone else for the privilege of not dying from exposure. In reality, these arrangements make them a partial owner at best, roughly equivalent to the equity. You will learn this rapidly if you are foreclosed on.

  • 'Economic rent' is a meaningless phrase, especially in this context. Rent is a concept of lease without ownership. We are literally talking about owning property. There is no rent. There is debt and burden, sure, but there is no rent.

I encourage you to inform yourself of the meaning of the term "economic rent". Spiraling land and housing values paid to real estate and banking interests is a financialized form of economic rent. The land component is one of the very oldest recognized forms, in fact.

  • Equity is not a lie. It's the very simple concept of a property's worth after deduction of amounts owing. Now the nuances and application has gotten insanely out of control in miltiple countries (I'm Australian, ask me about our multigenerational housing inequities!) But the basic idea of inflation increasing cost/value is generally sound.

I didn't call equity a lie.

A rental property and a ppr are nowhere near each other, not financially, socially or emotionally.

They are quite similar, actually. You will be paying for someone else's mortgage, namely the banker's, but just a smaller amount, solely for the privilege of having your own mortgage. Giving them different names doesn't change the financial relationship in which you are paying an excess to someone else just to have housing - and giving them the ability to remove that housing based on your personal finances. These are basic and undeniable facts of how the financialized housing market operates. It did not always work this way and the history is quite revealing.

They cannot be equated, no matter how much you torture the syntax.

I didn't equate them. I'm afraid you're exaggerating.

I've said "here are some similar things" and implied that one's ownership of a house is incomplete if they have a mortgage. Not much torture of syntax going on, I think it's pretty straightforward.

Each has their place for personal preference, but they are not the same

Renters are almost always economically coerced into renting, it's not a preference. The people who do think of it as a preference are rare and are usually so rich that they don't care that they are paying more to rent than have a(nother) mortgage.

Do you have many friends that rent?

[–] Taleya@aussie.zone 0 points 5 months ago* (last edited 5 months ago) (1 children)

Do you have many friends that rent?

Don't try and turn this into a ridiculous class war statement on me. Am I a homeowner? Yes. I've literally only been a homeowner for 13 months. Before that, I rented for over 26 years. Most of my friends still rent.

And yes, there are people who choose to rent - some choose the motility, some choose to invest over mortgage and some choose to remain renters for the reasons stated in the start of this very comment thread. Don't pretend otherwise.

You're still acting like loan debt repayments and a rental payment are the same thing. They are not. I don't care how many times you go to the "if you stop paying you lose your home" well, that's the barest, most facile comparison imaginable.

In short: I don't care how badly you want to be a pontificating chud

  1. A bank does not legally own a house under mortgage.

  2. Rent and loan repayments are not the same thing.

Get over it.

[–] TheOubliette@lemmy.ml -1 points 5 months ago

Don't try and turn this into a ridiculous class war statement on me. Am I a homeowner? Yes. I've literally only been a homeowner for 13 months. Before that, I rented for over 26 years. Most of my friends still rent.

The idea that renters simply have a prefer rent is absurd and I was attempting to be charitable in that you might be socially removed from this reality. What is your excuse for this absurdity, then?

And yes, there are people who choose to rent - some choose the motility, some choose to invest over mortgage and some choose to remain renters for the reasons stated in the start of this very comment thread. Don't pretend otherwise.

These are almost all misunderstandings of basic finance, not informed preferences. False consciousness, if you will. There are a handful of people who live in a place for a year or two and should rent, sure. This is very few people outside of maybe college students. Choosing to "invest over mortgage" means you think you'll be netting 100% returns every year. This is for delusional climbers that think they will beat the market or the financially incompetent. Luckily, very few people do this. In the real world, people rent because they cannot get a mortgage (yet). They are economically coerced by not having a sufficient down payment nor financial security to get a loan from the housing brokers - banks.

You're still acting like loan debt repayments and a rental payment are the same thing.

No I'm not.

In short: I don't care how badly you want to be a pontificating chud

I don't think you know what a chud is.

  1. A bank does not legally own a house under mortgage.

Legality is an incomplete analysis of the relationship of ownership. Cool, you have mortgage. What percentage of your total payment goes to a bank? What happens if you fail to pay for a year or two?

  1. Rent and loan repayments are not the same thing.

They are similar in this circumstance for the reasons I have provided. Feel free to address them directly if you would like to.

Get over it.

Oh dear.

[–] shortwavesurfer@monero.town 5 points 5 months ago

You will eat zee bugs