Money is not “virtual”. It’s a good like everything else. It’s price is determined by supply and demand. You could say it’s “virtual” because people want it for reasons unlinked to the real world, but that requires establishing a rule or metric for what demand is real or not.
Economic crashes can indeed be caused by supply shocks (e.g: the disease destroying crops). They can also be caused by other things such as psychology, governments keeping interest rates too low/high etc… I’m not sure you characterization of people being kicked out of subprime mortgage backed homes as a failure is correct. A different perspective is that those people cannot afford those mortgages once they lose their jobs/interest rates rise and it’s good they’re losing the 1% of their homes they owned (land + house) so it can be used for more productive purposes.
National debt actually isn’t that strange or special. It’s similar to business debt. If the US/UK governments can borrow at close to 0% real interest rates, it’s basically free money. If they can borrow at X% but then invest that money in the economy/infrastructure/education which in turn returns Y%, as long as Y >= X borrowing is fine. The problem with having a large debt to GDP ratio is that the cost of servicing said debt could become very high if interest rates rise, either because something bad happens in your country so people lending money think you’re less likely to be able/willing to pay back or because there’s less demand/more supply of comparable bonds.
To the best of my knowledge though, many such houses were left empty to rot, not used for more productive purposes.
I doubt this. Foreclosed houses go to auction and generally someone else buys them. The only time the house would be left vacant is if the house is worthless (either due to location or damage).
Which is indeed really strange and something I don’t really understand. I’d expect that whoever bought the properties after the foreclosure sale would live in it themselves, redevelop the land or put the housing up for rent at a price people would pay. Sure there are edge cases where empty housing makes sense (cities with population collapse = literally more housing stock than needed, super low cost housing which when prices fall the rent doesn’t cover the risk of having tenants) but those seem like edge cases which don’t explain the widespread phenomenon of empty housing.
My immediate thoughts are that either empty houses aren’t really a thing outside of specific cases and the examples we see in media are just a biased sample or that they are and something I don’t understand is going on. I’m leaning towards the latter.
A few vague thoughts:
Money is not “virtual”. It’s a good like everything else. It’s price is determined by supply and demand. You could say it’s “virtual” because people want it for reasons unlinked to the real world, but that requires establishing a rule or metric for what demand is real or not.
Economic crashes can indeed be caused by supply shocks (e.g: the disease destroying crops). They can also be caused by other things such as psychology, governments keeping interest rates too low/high etc… I’m not sure you characterization of people being kicked out of subprime mortgage backed homes as a failure is correct. A different perspective is that those people cannot afford those mortgages once they lose their jobs/interest rates rise and it’s good they’re losing the 1% of their homes they owned (land + house) so it can be used for more productive purposes.
National debt actually isn’t that strange or special. It’s similar to business debt. If the US/UK governments can borrow at close to 0% real interest rates, it’s basically free money. If they can borrow at X% but then invest that money in the economy/infrastructure/education which in turn returns Y%, as long as Y >= X borrowing is fine. The problem with having a large debt to GDP ratio is that the cost of servicing said debt could become very high if interest rates rise, either because something bad happens in your country so people lending money think you’re less likely to be able/willing to pay back or because there’s less demand/more supply of comparable bonds.
To the best of my knowledge though, many such houses were left empty to rot, not used for more productive purposes.
I doubt this. Foreclosed houses go to auction and generally someone else buys them. The only time the house would be left vacant is if the house is worthless (either due to location or damage).
Which is indeed really strange and something I don’t really understand. I’d expect that whoever bought the properties after the foreclosure sale would live in it themselves, redevelop the land or put the housing up for rent at a price people would pay. Sure there are edge cases where empty housing makes sense (cities with population collapse = literally more housing stock than needed, super low cost housing which when prices fall the rent doesn’t cover the risk of having tenants) but those seem like edge cases which don’t explain the widespread phenomenon of empty housing.
My immediate thoughts are that either empty houses aren’t really a thing outside of specific cases and the examples we see in media are just a biased sample or that they are and something I don’t understand is going on. I’m leaning towards the latter.