
Australia's Housing Frenzy - mathgenius
https://www.bloomberg.com/news/articles/2017-11-23/australia-faces-housing-hangover-twice-size-of-u-s-subprime-era
======
jesusthatsgreat
The problem is ultimately the fact that money is an infinite resource,
therefore it's a poor store of value. Property is a more stable / smarter
store of value because it's actually needed by everyone in life and is
relatively finite (in that land is finite).

We've had unprecedented global quantitative easing over the past decade, so
it's quite natural that house prices globally will meet and surpass all time
highs.

This is what happens when you keep printing money and set precedents such as
bank bail outs and debt write offs. If all money woes can be solved simply by
printing money it begs the question why don't we just keep printing more? And
the realisation soon hits home that if you were to do that, the price of
everything would rise, the rich would get richer and they could simply hoard
all land and property indefinitely while sucking every last cent out of people
starting out in life...

It works up until the bit where people start getting angry and create a toxic
environment in which nobody wants to live or do business...

~~~
zxcmx
But that would be... inflation! High inflation would affect collective
bargaining agreements, benefit increases, super increases and all sorts of
measures designed to keep compensation increases in line with increased cost
of living.

Central bank keeps telling us that inflation is "on target" at just 2% or 3%
p/a for about the last 5 years. Meanwhile, housing inflated more like 40% (70%
in Sydney!)[2] over that time, so how does that work?

OH WAIT, housing was excluded from CPI[3]. I wonder who decided that, and
whose interest(heh) that might possibly be in?

[1] [https://www.rba.gov.au/inflation/inflation-
target.html](https://www.rba.gov.au/inflation/inflation-target.html)

[2] [http://www.huffingtonpost.com.au/2017/03/20/this-chart-
shows...](http://www.huffingtonpost.com.au/2017/03/20/this-chart-shows-just-
how-ridiculous-sydney-house-prices-are_a_21903757/)

[3] [http://www.abc.net.au/news/2017-04-20/inflation-data-
suffers...](http://www.abc.net.au/news/2017-04-20/inflation-data-suffers-from-
exclusion-of-housing/8457718)

~~~
noddy1
Also, QE has involved giving banks trillions of dollars. The banks then either
sit on the money, or use it to inflate the stock market and property markets.
The stock market triples or quadruples and everyone says the economy is going
well. The money never makes it to non-asset owning working stiffs, and
consumer prices as measured by central bank mandated CPI measures don't really
change. So the central bank and Keynesian economists brag that "inflation is
under 2%! QE stimulus really is a no downside perpetual motion free growth
machine!". And the press states that "nobel prize laureates" call for and
support these measures, and politicians and the public assume that a "nobel
prize laureate" in economics is like a "nobel prize laureate" in hard science,
where awards are given for settled progress in science that everyone agrees
on. And people don't realise that macro-economics and monetarism are nowhere
near settled science, and that there are PLENTY of people still calling
bullshit from the austrian/chicago school.

Sadly it looked like this silliness was going to continue forever.

Fortunately, the market has given us inflation-proof cryptocurrency, and these
central banking bastards are finally going to have to test their theories and
put their ideological balls on the line in a free market with the ability of
nation states to control currency as the price for shitty science. Good luck
to them - they will need it.

~~~
alt2501
Are you saying that you see crypto as a possible solution to this problem? Can
you elaborate at all on that?

~~~
yyyyip
Previously the only real options we have to use as "money" are nation-state
derived and under the control of central bankers. For various reasons, nothing
else (eg. gold, stocks, property) presented a practical alternative to state
issued money in fulfilling the core functions of: \- medium of exchange \-
unit of account \- store of value Central banks and governments always ended
up debasing their currencies. They ranged from super-corrupt to just believing
weird keynsian-stimulus stuff, and always end up printing money and debasing
the currency. QE given to corrupt politicians as happens in africa enriches
the politicians at the cost of everyone else holding or earning the currency.
QE given to bankers as in USA enriches asset owners at the cost of savers and
wage earners.

Finally, cryptocurrencies with fixed, limited inflation schedules provide a
competitive non-inflationary alternative to state issued currency.

------
Gatsky
Pronouncements like this come out all the time in Australia, for at least the
last 7 years. This is an example of a headline that can't lose - you are
telling people that can't afford a house what they want to hear, at the same
time spreading fear amongst those that do own property, and eventually you'll
be 'right'.

The problem primarily exists in Sydney and Melbourne. Melbourne in particular
is experiencing high population growth, and the city is already sprawling,
without the ability to dramatically increase housing density around the
central city. Growth in land prices is likely to continue for a while because
of this, perhaps not at the same high rate. Apartment prices are more at risk.
The ridiculous price growth in property over the last 10 years has created
many asset rich baby boomers, who will continue to invest in property and
transfer wealth to their children. It certainly is nothing like the sub prime
loan crisis - Australian banks have remained quite selective in giving out
home loans.

~~~
sqldba
Australian here - I agree. HN must realise that this story gets trotted out
basically ever week on prime time TV.

And it's true that some people have been really stupid financing multiple
properties off of each other and trying to live off of rentals then having it
all fall down. But that's hardly more than a tiny minority of idiots.

Furthermore the Australian property market really has at least two completely
different levels. You've got Sydney with multi-million dollar hovels. And then
you've got pretty much the rest of the country which is reasonably priced.
There might be a third one which is "CBD apartments" which are also crazily
high priced - but if you live there you're an idiot too.

Guess where most of the media is? Guess where most of the focus on pricing is?
Yes... it's Sydney.

Now it's true our houses are relatively expensive. I watch some American shows
where they're house-hunting and get pretty much mansions for 1/4 of the price
of a normal house here, but, I suspect those are in semi-remote places.

But is it a party? Not really. Is it over? Not by a long shot. You can't trust
any of this news.

Of course if you're buying a house way beyond your budget, or buying multiple
houses, you're an idiot and get what you deserve. Also there's always the risk
you do everything right but then lose your job, run out of savings, and can't
make repayments - but we're all in that position.

~~~
grogenaut
What is "CBD apartments"? It just turns up a development in the Big Easy for
me when I search it.

Edit: Not sure why an honest question after a google gets a down vote.

~~~
dalfonso
I’m American but my guess is central business district apartments AKA
“downtown” apartments.

~~~
grogenaut
aah that makes sense. thanks.

------
danieltillett
House prices in Australia are insane. We have not had a recession for almost
30 years and most people here under 40 have no idea what a recession means.
When this party ends the hangover is going to be horrendous.

~~~
alfiedotwtf
I still remember driving home one day from work during the GFC, and was
completely shocked that (from memory) every second to third house was for
sale.

With a lot of hot money going around Melbourne these days, low interest rates,
and a daily influx of Chinese investors, it's a bubble that's inevitable going
to implode.

...on Chinese investors - I used to be on Williams street by 6am every day,
and without fail there two busloads of Chinese investors ready to look at the
new apartments being built there.

The game now is, which side dries up first - supply of houses/appartments, or
the demand of Chinese investors.

------
thomasfoster96
Variations of this headline have been running for years now, so I don’t really
think this one is going to be any more accurate regarding timing than any of
the other predictions. There seems to be an un-ending political will-power
(from both sides of politics and at both the state and federal levels) to
continue housing policies that predate Australia’s last recession, and to
offer only stop-gap measures to get young people back into the housing market
or to maintain prices.

I live in a rental, which is being rented out below what the market rate would
be, thanks to an extent to negative gearing. There are at least half a dozen
building sites in my street, which is about 20km from the centre of Melbourne.
The median house price has soared this year to well over AU$1m (units are more
than half that). We get at least a dozen flyers each week, written in both
Chinese and English, advertising that there are buyers in the area with
budgets up to AU$2m or that houses have sold for more than AU$1m.

When the bubble does burst, there’s no doubt that it will be disastrous in
parts of Melbourne and Sydney. It’s unclear whether there is the capacity to
make up for a glut in new housing projects with public infrastructure
projects. That’s not to mention the enormous hit that huge numbers of home
owners will take when their homes drop in value.

No doubt the post-mortem will be quite damning for many policy makers.

Edit: ‘fraction’ was inaccurate, and it’s academic as to the extent negative
gearing affects rents.

~~~
stephen_g
I doubt negative gearing affects the rental rate much. Possibly in the single
digit percent kind of area, but nothing like what 'a fraction' implies.
Statistically, rental rates have an extremely strong correlation to vacancy
rates. Although there are claims that when negative gearing was briefly
abolished, rents went up, they actually went down in many markets and up in a
few, but all of them were just following vacancy rates like they always have.
Part of this may have been that it wasn't abolished for long enough to see the
effect of the reduction in new stock encouraged by negative gearing, but it's
pretty terrible at doing that (90% of NG investment is in existing property)
so that probably wouldn't have been much.

The yields are low because rents have to be affordable to most of the
population, whereas banks will lend ridiculous amounts of money to speculators
for houses, fuelling the bubble.

All in all, NG (in concert with the capital gains tax discount) mostly
encourages speculation, artificially increasing house prices, so it should be
at least restricted to new-builds only.

~~~
thomasfoster96
You’re probably right in general re: negative gearing on rents (I’ve edited my
comment).

------
shshhdhs
> Australia’s obsession with property is firmly entrenched in the nation’s
> economy and psyche..

The article's quote seems to be accurate from my anecdote. I visited Sydney
recently, and the tour guide taking me to the blue mountains started his trip
by driving through neighborhoods to point out the ridiculous home prices. I
thought it was strange, but then everyone I met was eager to discuss the home
prices, or asked me the price of my home (in the US). It seemed the housing
market is on everyone's minds.

~~~
teddyh
— _When the market is on everyone’s mind, it’s time to sell._

Joseph P. Kennedy, 1929 (paraphrased)

~~~
conanbatt
I want to say that in argentina, housing prices doubled in a few years up to
2009. Argentina housing was not hit by the Great Recession because we had no
debt associated with housing. Housing prices didnt drop at all, and they were
still very high by people's income.

I predicted that prices would drop, the same way people predict now that
housing prices will drop. 8 years in, and prices grew organically from that
point.

It is exceedingly difficult to lower housing prices without a direct hit.

------
sho
Matt Barrie (founder & CEO of freelancer.com) wrote a far lengthier and more
detailed essay on this a week or two ago, which has kicked off this latest
round of navel-gazing: [https://medium.com/@matt_11659/matt-barrie-australias-
econom...](https://medium.com/@matt_11659/matt-barrie-australias-economy-is-a-
house-of-cards-6877adb3fb2f)

Be warned, it's a _long_ read - but I think he's basically right.

~~~
nimish
That's a lot of words to say that Australia is affected with terminal Dutch
disease

On balance however, what exactly would you expect Australia to offer the world
better than anywhere else?

------
simonblack
Australia's house prices are skewed badly by Sydney's house prices. Sydney's
is unfortunately roughly one-quarter of the total Australian housing market.

Physically, Sydney is a very long narrow strip squeezed between the mountains
and the sea. The poulation of Sydney is constantly expanding. To expand the
population, you need to build further and further away from the CBD.
Eventually, the commute becomes up to four hours per day. Eliminating that
commute puts a lot of demand pressure on the inner Sydney suburbs, and
consequently extremely high housing prices.

Melbourne is not quite as constrained physically, so prices there are about
25% lower. But commute times are rising rapidly.

Away from Sydney and Melbourne (where JUST TWO housing markets make up 40% of
the Australian housing market) housing prices are much more 'normal'.

For a US analogy, imagine if a quarter of all US houses were trying to squeeze
into New York.

~~~
closeparen
That’s a pretty small skyline for a city where the only way to build is
outwards. Sure you’re not forgetting an axis?

~~~
cknight
There are cultural issues at play there which will take quite some time to
overcome. High rises in Sydney are popping up around train stations now, but
the vast majority of the metropolitan region's land area is taken up by single
or double-storey family homes with yards. Pretty much every new high-rise
development in these sorts of areas is met with substantial resistance. I
don't blame them either - after living in medium-density places in Europe for
a few years, I'm sick of it, and want my own house.

The problem with Australia is that too little thought was given to making
viable cities outside of the state capitals. I would love to live in a smaller
town but my partner needs a major STEM research university to work at. Europe
has such universities in small towns, but Australia does not. Everything is
too concentrated in the capitals.

~~~
mceoin
ANU? Small town, excellent STEM programs.

~~~
cknight
ANU is likely the best compromise option for us at the moment, yeah. All my
friends and family are in Sydney, so it's not too far.

Though even as a Sydney-sider, I don't consider Canberra to be a small town.
Not after living in German university towns for the last 5 years with pops
<150k.

Having said all that, Canberra is an example of how Australia has (once)
planned out a charter city and had it succeed. However I am not sure we can do
it again without the federal government being as deeply committed as it was in
overseeing its own future seat.

------
eliben
What I find most amazing about this is Australia being the 10th least
population dense country _in the world_
[[https://simple.wikipedia.org/wiki/List_of_countries_by_popul...](https://simple.wikipedia.org/wiki/List_of_countries_by_population_density)].

It's very interesting to ponder how our proclivity of huddling together in
tight cities can cause such anomalies.

~~~
calsy
No need to ponder, its very simple, people would rather not live in the
desert.

~~~
eliben
There's _plenty_ of land in Australia which is absolutely not desert. Also
there are cities built in deserts these days.

~~~
calsy
There is plenty of land that is not desert, but the majority is desert.

Any stat comparing population size with land mass is misleading. Australia is
hot, 300km off the coast and you’re in drought territory. Go in further and
you won’t last a day in the sun without shade and water.

It’s not the US, there are towns in the outback, the majority choose not to
live there. People will ordinarily group together in a single area where jobs,
infrastructure and general quality of living are high.

~~~
ghaff
Some of the fastest growing US cities are in the desert. However, there is
(sort of) water available for those. (Water supply in the southwest is a major
issue though.) I assume inland Australia would have bigger issues with water
supply as they don't have a large mountain range draining into the interior.

~~~
calsy
This place is as flat as a sheet of paper, seismic activity is minor to non
existent. It's just flat horizons and searing heat, a single road that never
ends. Second only to the Antarctic as the driest place on Earth.

~~~
tmnvix
Wouldn't that be the Atacama?

------
pdm55
Take a walk on the wild-side around West End, Brisbane, where I live. Factory-
city has become apartment city:
[https://www.google.com.au/maps/@-27.4845284,152.9998144,3a,6...](https://www.google.com.au/maps/@-27.4845284,152.9998144,3a,60y,34.7h,91.7t/data=!3m6!1e1!3m4!1sz-
hYnkmH0L4OsUiV6LaI7g!2e0!7i13312!8i6656) What you can see there is all the
construction going on say six months ago. When I strolled around last week,
every apartment building had "For rent" signs out the front. Typical rents
seem to be about $500 per week for a two bedroom apartment. The main
attraction is the proximity to the CBD. But will they be filled? Perhaps
Brisbane's typical 1 hr commute into the CBD will motivate people to move
here. I doubt anyone knows.

------
IntelMiner
Having recently returned to Australia after a few years abroad, the state of
the nation is on a terrifying precipice. Mostly due to political reasons

The nation is in a run away housing boom, one of which people have been
warning will explode since around 2000/2001\. The fact it's continued this far
has made it more and more alarming

The extremely conservative government in charge since 2013 (ironically called
"The Liberal Party") has pushed in blatantly corrupt and utterly abhorrent
directions in virtually every political policy since day one

The nation is warning of a "brain drain" taking place as the young and skilled
jet off to the US, Europe and others. Australia has become a digital backwater
due to the "National Broadband Network" (NBN) becoming a political football
and being firmly run into the ground

With a ballooning near half trillion dollar government debt (at the time of
writing) and a housing market on the verge of either total collapse under its
own weight, or simply running out of runway to continue expanding, an aging
populace with its educated young leaving and a government paralyzed by its own
incompetence, Australia is heading for some seriously tough times

~~~
akst
For non Australians, the “Liberal” in the Liberal parties name stand for
economic liberal.

~~~
conanbatt
Same interpretation in Argentina. Liberals in the U.S. are unique in this
regard, they mean exactly the opposite in the economic sphere.

------
hyperpallium
Article is pretty comprehensive. Just add that the government in power during
a housing price collapse will be out, so they'll do whatever they can to
forestall it.

High immigration rates mentioned in the article are because Australia is a
great place to live; this will comtinue.

We did have a housing correction a decade or two ago, with a mostly soft-
landing. But instead of prices actually falling, people avoided selling of
they could.

The only way prices will fall in practice is if the economy implodes - while
this could happen, like a nuclear war, there would be much more serious
problems to consider than house prices if it did.

~~~
dageshi
Presumably interest rates will just be slashed to near zero in order to
alleviate the pain and boost inflation in order to erode the debt. Basically
what happened in the UK/US post 2008 crash.

------
zeristor
The Open Data Institute did a talk on the correlation between empty properties
and high house prices yesterday:

[https://www.youtube.com/watch?v=hbua6Ccyguo](https://www.youtube.com/watch?v=hbua6Ccyguo)

~~~
conanbatt
TL;DW version?

It's a modern take of Georgism to say land speculation is whats causing
housing prices to soar.

------
nl
The only thing more important to the Australian economy than China is housing.

Many seem to think that the Australian property market will crash like the US
market did during the financial crisis.

It'll be interesting to see. I'm sure the apartment markets in Sydney,
Melbourne and Brisbane will see some falling prices at some point, but few
professionals are forecasting a US-style crash. Instead, most think prices
will just stop growing.

I see lots of people saying "the bubble will burst", but it seems to me many
of them are hoping to get into the market rather than looking at any evidence.

~~~
strken
The evidence presented is usually the (very high) levels of consumer debt, the
(very high) exposure of Australian banks to property, the lack of economic
diversification, and the effects of foreign speculation.

I'm not working in finance, but whether false or true, this seems like an
attempt at some kind of evidence of the potential for cascading failure.

~~~
nl
Yeah, civilians take that to imply a crash in prices. It's not.

------
cletus
So I'm from Perth. Well, technically I largely grew up in mining towns but
basically I'm from Perth. I've now lived in NYC for 7 years. I've also lived
in the London, Zurich and Germany (Cologne).

Perth had a lot going for it 20 years ago. The standard of living was
incredibly affordable. The weather was nice. It was a dull place but well-
suited to outdoor activities and raising a family.

In the early 2000s the resources boom happened, fueled by China's insatiable
appetite. In the space of 5 years, a 1970s brick home <5km from the CBD went
from <A$100k to A$400k. One of my biggest regrets was walking away from buying
a house in 2002 that overlooked the ocean for A$430k that 4 years later
would've been worth probably A$1.5-1.8m.

Now at the time the same headlines reigned. Prices are going to crash. But in
hindsight there were four important factors:

1\. Housing was previously too cheap and there was a correction;

2\. The resources boom created a massive backlog of construction projects that
choked supply for building in the housing market meaning building a house took
longer and was more expensive. In the 90s you'd have TV ads for house and land
packages for A$100k that would take 3-6 months to build. In a short space of
time building a house took 12-18 months and cost $300k+ plus land.

3\. The resource boom brought an influx of skilled migrants that increased
demand.

4\. Those in mining and construction got paid a whole lot more which means
they could spend a whole lot more and there's only so much inventory of
desirable property (near the city or on the coast or river). Trading up to
those properties created a windfall from current owners which they then spent
and so on.

So the GFC came in 2007. Australia didn't have the subprime problem that the
US did. More importantly though, in 2008 China stopped buying as many
resources. Again the predictions of doom came. Momentum probably drove the
market still up (in parts anyway) for another 2-3 years. Since then it's
either gone down (<10% mostly) or stagnated. In the last few years this has
caught up with rents and properties that once might have 50 applicants for
$500/week now couldn't be filled at $350/week.

This seems to be the Australian norm for property cycles. It happened in
Sydney in the 1970s. Sydney became really expensive but probably stagnated
until the mid 1990s at least.

While this was all going on in Perth and Brisbane (Western Australia and
Queensland are the two big resource states), Sydney and Melbourne were going
nowhere.

What changed around 2010-2011 is the same thing that happened in many other
places around the world: money came into real estate in the large cities.
Particularly foreign money. Particularly Chinese money.

Some will argue low interest rates were driving this but they're wrong.
Properties above $3-5m in NYC for example aren't bought by people with a
mortgage. They're bought with cash.

It seems like certain people in China built up a large amount of wealth in the
2000s and the government placed restrictions on how that capital could leave.
I believe that certain investments including real estate were one such
exception. Wealthy Chinese wanted to get money beyond Beijing's control. They
also wanted to have an "out" by buying residency/citizenship in other
countries.

So in the last 7 years median prices in Sydney went from (IIRC) ~A$680k to
A$1.1m. Bear in mind that this is even with large swathes of suburban
wastelands in Sydney's West ostensibly bringing the median down. The effect on
the harbour, the ocean and in Sydney's inner suburbs and North Shore is even
more pronounced.

All the while software engineers might still be getting paid the same A$150k +
bonus they could get 10-15 years ago.

High property prices really are a disease. It makes rent more expensive. It
makes everything you buy more expensive since something has to cover the cost
of the premises those goods and services come from.

I believe Switzerland has a far better policy approach to this than many other
countries I've seen. The intent seems to be that it is an undesirable outcome
to have foreign money come in and buy up the country, basically. Likewise,
they don't want a rampant speculative market so short term capital gains on
property are taxed punitively. It may have changed but when I was there this
meant 100% of gains if sold within 2 years and this eventually scaled down
over the next 8 years.

People need somewhere to live. Even if they don't buy, prices drive rent. Only
luxury buildings get built in NYC now because it doesn't cost much more than
"affordable" buildings but it's a whole lot more profitable. That needs to
change. The world's cities can't just be used for money laundering and a
holding asset for the ultra-wealthy across the world.

So as for Sydney and Melbourne I don't think the prices are going to come
crashing down. They may stagnate for years and even dip. But the Australian
banking industry is pretty well-regulated (by comparison to the US anyway) and
for those at the high end of the market, they've paid cash anyway so who cares
what they do or lose? What I mean is dropping prices won't force them to sell.

------
dmh2000
if Australia ends up like the crash in the US in 2009, that's the time to
start buying up the foreclosed houses. Because the market will come back.
Folks in the US who didn't panic made out very well.

~~~
conanbatt
Everyone knows this. People expecting a dip are everywhere.

------
rwmj
Is measuring total housing assets vs GDP [first graph] useful? On the one hand
housing is related to the size of the population, and population is related to
GDP, so it seems like the two measures should roughly follow each other. On
the other hand price and availability of land must be a big factor (hence the
US ratio being very low). Also it's unclear that total housing assets is a
real thing since the vast majority of houses are not bought or sold regularly
so the price can be unduly affected by a frothy minority of sales.

------
hguhghuff
House prices won't go down in Australia. There's an infinite supply of corrupt
Chinese cash that needs to be laundered, and every Australian is entitled to
sell their piece of Australia to get their fair share.

Ha ha downvotes from those with a vested interest in getting those sweet sweet
Chinese dollars.

~~~
Arnt
I think you mean "the Chinese authorities cannot possibly get a list of
Australian property owners and jail a few thousand of the ones that can't
explain the origin of their money".

~~~
hguhghuff
No, I mean that there is on onus in Australian law to prove other forms of
investment are not from criminal origin, but no such onus on real estate.

That's because no one wants to look at the fact that our housing boom is
driven by the proceeds of crime on a gargantuan scale.

~~~
Arnt
Oh, I see. You're talking about a giant immigration wave from China. I thought
you had in mind people who were subject to Chinese law and could be arrested
by Chinese police.

~~~
hguhghuff
No, that would be racist.

I object only to real estate sales to people who are not permanent residents
or citizens. I don't give a shit what country any Australian is originally
from ... we are all Australians who hold citizen or permanent residen status,
no matter the color of your skin or religion.

~~~
drieddust
I think this is a global phenomenon.Real Estate prices in India escalated
pretty much because people settled in decided to put their money into buying
houses so that they can sell or rent them for a very high returns. This in
turn forced realtors to over extend themselves.

Our previous government was corrupt to the hilt so this continued for over a
decade. That said India now have strict regulations in place[1] to curb this
behaviour. I am not sure why other countries cannot follow suit.

I have no issues with foreign investment comes into infrastructure and
commercial space. I think its mutually beneficial. However, inflow of foreign
money into housing is just evil. Local population with fixed means of income
just cannot.

[1] [http://www.freepressjournal.in/india/rera-all-you-need-to-
kn...](http://www.freepressjournal.in/india/rera-all-you-need-to-know-about-
the-real-estate-act/1055591)

------
jgalt212
Rent component of CPI: is it all rents (lagging indicator) or just newly
singed leases (current indicator)?

------
vasilipupkin
all you need to do is buy bitcoin and wait 3 months and you will have enough
money to buy a house. Simple.

~~~
conanbatt
If you had invested 100k in bitcoin in 2011, you would have 300 million today
~

~~~
vasilipupkin
Exactly, and it's not too late

------
acd
Why are banks allowed to create cheap credit out of nothing and when the
bubble eventually bursts the banks are always saved by the tax payers?

What i an trying to say is private investors in the banks and its debt profits
during the good boom time on the loans but the tax payers pays for the losses
after bubbles burst. This is not pure capitalism it’s something else.

Big thanks goes out to all coders working on block chain technologies! You
will change the world to a better place!

