I’ve been thinking of another take on this matter. What if the reason why houses and land are expensive at all is that the government intervenes to make such lending possible in the first place?

In other words, what if the causal relationship is backwards, and in fact the cause of high housing prices is the artificially low interest rates and various other protections offered to lending institutions?

In general, the ability to declare bankruptcy means that those with leverage never feel the true extent of their losses. Think about it: if you have a 50% chance of doubling your money on the stock market and a 50% chance of losing it all, then there isn’t much of a reason to invest. But, if you utilize leverage in view of our bankruptcy customs, you can stand to multiply your winnings by a much larger factor while only losing the same initial investment in the event of a defeat.

In a world without limited liability (is that what makes shareholders immune from corporate debt?) and artificially low interest rates, it’s hard for me to imagine anyone wanting to use much leverage at all.

It’s inflationary, to be sure, but that’s going to happen anyway.

So, what’s bad about this idea?

A simple solution. Pass a law that makes all U.S. pennies worth $5.00, nickels will still be nickels, dimes will be dimes, but pennies will be $5 coins. Banks hold a lot of pennies so they get bailed out, the people living in America have the pennies not foreigners. Small business’s get a slight surge along with the great Americans that saved their pennies. Instint fix.