Comment by pie_flavor

> If you own a house, you didn't have its cash value when you bought it; neither your car, nor (most likely) your education

When I grew up I was told to not make debts if not needed. So many older people did indeed save up until they could afford a car or a house. Education was always mostly free where I lived.

Nowadays it seems like ordinary people would need to pay off a house their whole life and thus also need to keep income high enough to keep paying installments. This takes away so much freedom from people as they are trapped in their high paying jobs...

> Yes, and then in the interim we invented having a hundred trillion dollars in GDP.

And every now and then we have to rescue banks that are too big too fail at the cost of everyone else, because someone dreamed up a way to increase short term profits that involves giving loans to people who will never pay them back.

> neither your car,

Praising a trillion dollar GDP, but can't afford a used car.

> If you own a house, you didn't have its cash value when you bought it;

> we solved the problem with ramshackle one-room buildings with dirt floors,

there is a fallacy here. People with access to debt bid up the price of an asset, like a house, against other peoples’ similar access to debt. Sans debt access, the solution was not necessarily a small ramshackle house. The fallacy is the belief that the same asset price - whether opulent or ramshackle house, wouldn’t adjust to the reduced level from the bidding environment. The differential cost of construction for a nicer house can be countenanced in the access-to-debt case, but that is second order.

Illustrative straw-man example: Suppose, once one had a parcel of land, that it was trivial to construct one’s ‘starter home’ the ramshackle house if you like. Get one’s family and friends to help build in exchange for future return favors. As one advances in life, rebuild to have something more opulent. The rub is in the parcel itself. Unlike the would-be house, it had no cost built-in, just whatever price the previous owner was willing to accept to release their parcel. That parcel’s (and those around it) price reflects the market’s access to debt, or lack of access to debt. In the market without access to debt, parcel pricing reflects which buyers have accrued more savings vs other buyers. In the market with access to debt, parcel pricing reflects who can access more debt (through the various means we know of today - down payment ability yes, which parallels the non-debt’s savings case, someone co-signing, long term expected future earning potential vs someone retired, the parcel itself put up as collateral, perhaps other non-immobile assets put up as collateral, like the family oxcart).

The point is that there isn’t necessarily a 1:1 coupling between market’s debt vs non-debt access and whether the construction is opulent vs ramshackle.

> I prefer having access to credit and so does everyone who owns a credit card.

A good number of European countries have only half the poverty rates - the dirt floors and carts you're talking about - of the US yet barely use credit cards.