House prices

Our property market is "boring" compared to US, UK and Canada: https://rba.gov.au/publications/fsr/2021/apr/global-financial-environmen...

whoa!

Yep it's not at all just an Aussie thing NZ is often the best country to compare things with and their realestate market is going just as crazy.

I was surprised at this comparison of countries as normally we are in the top three, but the way in which they look at and compared things here we come in at 17th (NZ highlighted as from a NZ article)

Article is a few months old late November 2020 but still old enough to be relevant
https://www.oneroof.co.nz/news/kiwi-house-prices-how-do-they-compare-to-...

16th

which would indicate that by global standards we have a long way to.

ie Housing is going to become much, much less affordable

"Interesting to go back 5 years and read the opening page.

Even with a global pandemic and the biggest recession since WW2 the right answer was : Up."

and what was the governments reaction to these situations?

I know you weren't referring to 2008, but gfc, and pandemic?

...srimulate the housing market...

from both sides of government I might add, prop up the building industry, and stimulate the housing market, ...in an already 'hot' market... both times... and other times...

it seems a bit of an obsession, a cynic would say a politician, negative geared, family trust, cgt totally self serving obsession...

that overstimulates a market already under enough 'natural' stimulation ...over the top immigration in 2008, and returning expats in 2020 - 21...

seems if these cats had done some good research and had some maths skills, they might have seen that stimulus could have been better placed elsewhere

it also made a lot of developers, builders, and 'grubby subbies' quite wealthy in the process, with their growing 'portfolios' and tax benefits...

nothing personal against building trades, but thet are a bit, well kind of... grunt work.. in the same period many toolmakers and the like have struggled to even find work, with an ever diminishing manufacturing sector, ...what a totally dumb piece of oversight that turned out to be in the midst of the pandemic...

the government, of all colours and stripes, have an unhealthy obsession... a rather stupid myopic one...

and the pandemic stimulus... scomo/frydenberg's 'bridge' to nowhere... is another massive lost opportunity that has gold plated our already unaffodable eggs in one basket scenario...

the lucky country

"You'd have to ask that question around the world.

NZ, USA, UK etc etc . It's all gone nuts.

Where's the end, the correction, the crash?

Might be a while off yet.

Bourke looks cheap."

I think it is a while off yet... now...

especially with all this talk if mmt, the lefty's see it as a potential answer to their wish list... but we're already living it...

a corrupted version of it... who would've thought that could happen?

"You'd have to ask that question around the world.

NZ, USA, UK etc etc . It's all gone nuts.

Where's the end, the correction, the crash?

Might be a while off yet.

Bourke looks cheap."

I think it is a while off yet... now...

especially with all this talk of mmt, the lefty's see it as a potential answer to their wish list... but we're already living it...

a corrupted version of it... who would've thought that could happen?

One perspective is:

Governments implement a range of policies targeted at business productivity and competitiveness, economic growth and prosperity, and economic and financial market stability, all combined with low inflation as an equally important objective.

But a number of policies and other scenarios hinder wages growth such as global competition squeezing business profits, labour market reform/deregulation, competition policy, high levels of immigration, use of cheap offshore labour, etc. Some of these policies are intentional because Australia is viewed as a country whose labour costs are too high, thus rendering us uncompetitive in a range of industries.

Hence, Australia has experienced a long run of economic growth and asset price rises (driven in particular by low interest rates and easy credit) combined with low inflation but at the cost of flat wages growth,

Hence, it is the balance of policies aimed at achieving productivity and economic growth but combined with low inflation that structurally embeds deteriorating housing affordability in our economy.

Modern developed economics are currently stuck in a cycle of being dependent on, and addicted to, low interest rates and easy credit in order to spur economic growth and asset prices, with inflation kept at bay by the things like globalisation, competition, deregulation, microeconomic reform, immigration...which are all aimed at putting pressure on final product/service prices and business input/factor/supply prices, including wages...

thats just neoliberalism 101.

is there a country (western democracy) where that isn't the case?

It does appear there’s a way to go
But here’s why it will crash
The average aussie home in the average aussie suburb now requires two full time average aussie wages to to keep up with repayments which are currently at record low rates
It will either crash when a) the rates go up or b) when the punters realise their life sucks
I’m tipping b)
c) of course ain’t gonna happen, wage growth matching those graphs above

shoredump wrote:

It does appear there’s a way to go
But here’s why it will crash
The average aussie home in the average aussie suburb now requires two full time average aussie wages to keep up with repayments which are currently at record low rates
It will either crash when a) the rates go up or b) when the punters realise their life sucks
I’m tipping b)
c) of course ain’t gonna happen, wage growth matching those graphs above

Good ol average house in an average suburb behind the beautifully average merewether
How on earth do two average punters raise a family and all those expenses that come with them on $900 a week repayments?
It’ll be $1500 a week in 10 years time
Surely it has to crack

host a pic

@gsco

Hence we are developed countries and not a developing country.

BTW. Developing countries housing markets are so much different in so many ways

Take a developing country like Indonesia where outside an area like Bali or Jakarta you dont have the same issue's to the same degree as things are so different..

Credit to buy a house is much harder to obtain and interest rates much higher, much of the economy is cash driven anyway, a huge chunk of the population dont even have bank accounts, people often build what they can afford to build without a loan from bank, often borrow money from others instead like family. (and as we know people rarely live alone often housing whole generations under the one roof)

Other factors are involved, like it's cheap to build, you generally dont need building plans drawn up or building inspections or to bide by endless regulation and red tape.

You just apply for a building permit, by basically just saying what you want to build (etc single story 3 bed house) pay a little fee and bang you build your house with not even a final inspection (but even then a huge number of homes are built without even a permit of any kind)

You can get anyone to build the house, mostly people who call themselves builders, but they aren't registered or havent done apprenticeships etc, their skills/knowledge is just from doing the job with others.

But you can also get family or friends to help or if have the skills build yourself, including every aspect like electrical & plumbing if you think you can do it. (no inspections needed, no ticking off)

Off course this lack of regulation and qualifications can have serious downsides too especially in a country probe to things like earthquakes, and its also a gamble on the quality of the build and if you have issues they would be much harder to get the builder to rectify.

But it does mean building cost are cheap equaling more affordable housing.

Land prices are also not restricted by land supply so much, because zoning is so much more relaxed, and in many areas doesn't even exist, many areas if you own the land you build a house or as many as you can fit on your land, often other family members build on same land (Bali is stricter but as we have seen in areas like Canggu once all rice paddies its easily changed)

BTW. i remember this conversation with an old local man, once he really likes me and didnt want me to go home, he said i should stay and live there just fish everyday etc, i laughed and said i must go home and go back to work to pay my mortgage off my home, he looked at me in confusion, and i had to explain to him how i borrowed money from the bank to buy a home, and he asked why you i didn't just save a little and build with the help of friends.

The concept of our system to him was so foreign.

Oh and ongoing cost like rates, many areas of Indonesia they don't exist at all.

We bought some land once and the rates hadn't been payed for 25 years, kind of freaked me out at first thinking it would be big money but it ended up being about $100 all up, the yearly rates on it now are about $6 a year.

Off course we get nothing for that, i don't even think there is a rubbish collection service yet.

But my rates here are about 2K a year, which is above the weekly average wage, while $6 (Rp60,000) in Indonesia is well below the weekly wage, which would be about Rp500,000 rp now possibly higher.

@indo they're really cool and interesting insights about life and building houses in Indonesia, loved reading it.

Yes compared to developing countries, developed nations like us don't have much scope left in our society/economy for long-term, sustainable, strong economic growth (whether that should be the goal is a different question...). It seems the only real options are via:
(i) high immigration, sustained cheap/free credit increasing the money supply, and relentless pressure on prices to control inflation (this is the route we're stuck in, which entrenches declining housing affordability by sustained asset price growth but pressure on wages), or
(ii) productivity growth, particularly labour productivity.

Labour productivity growth is very important and the best option. The idea behind it is if we achieve more units of output per hour worked, businesses will be inclined to increase hourly wages (again, the RBA explains things pretty well: https://www.rba.gov.au/education/resources/explainers/productivity.html). Measures often touted as aimed at increasing labour productivity include competition forcing businesses to innovate, low interest rates allowing businesses to invest, immigration of skilled migrants, microeconomic reform and deregulation, tax and other incentives for business to undertake and invest in R&D and adopt new technology, encouraging stronger ties between business and universities, privatisation of poorly run infrastructure assets, sustained government investment in infrastructure, improved education and training, etc.

But many of these measures also put significant pressure on wages...

There is a lot of research showing that, and trying to work out why, productivity growth drastically slowed in developed economies after the GFC, and hence why developed economies are stuck in route (i) above. And productivity growth is challenging in general, particularly in a technologically advanced, developed economy with less scope for technological improvements. Many of the above-mentioned measures involve longer-term, less visible, silent, hidden investments and actions by governments done in the background out of the public's eye and that need to be sustained across multiple political cycles and by both sides of politics... These actions are also hard to explain and sell to the public, hence don't win elections. Zero interest rates and asset price bubbles are much more fun...

I'm happy though, I found a nice little bank along Kawana this morning, beautiful morning with much to be grateful for...

right on GSCO.

@gsco

Yeah i don't know that's all above my knowledge.

Is there a developed democratic country though where housing affordability is not getting worst?

This might seem pessimistic but i think it's all inevitable basically because success in anything is never equal.

To me its like a running race, if it's a 100 metre sprint the gaps between first and last and all competitors are small, a 1 km race bigger again, 100km race even much bigger and on and on it goes.

I think as time goes on that it will get worst because it's a natural process whether we like it or not.

Especially when land is a limited resource but demand only ever increases, especially in cities and highly sought areas like coastal areas.

Offcourse i still feel for those that cant get into the market and i do worry for my children.

I think people though need to take different approaches to getting into the market especially lower income earners, i think for many gone are the days of thinking you can buy a house where you want or where you live and work and need to take different avenues to get what they desire, which is how both myself and my sister both go into the market.

shoredump wrote:

Good ol average house in an average suburb behind the beautifully average merewether
How on earth do two average punters raise a family and all those expenses that come with them on $900 a week repayments?
It’ll be $1500 a week in 10 years time
Surely it has to crack

host a pic

There was a time when maximum home loan term was 20 years, then 25, then 30 years. Now 40 year loans are available, just another method to keep it growing.

@indo housing affordability is deteriorating across all developed countries, and this is easy to see.

Consider most of the countries with spiralling property prices in https://www.rba.gov.au/publications/fsr/2021/apr/global-financial-enviro....

Wages growth:
- New Zealand (https://www.stats.govt.nz/news/wage-growth-remains-at-10-year-high): Averaged less than 2% for past 20 years.
- Sweden (https://tradingeconomics.com/sweden/wage-growth): Averaged about 3% for past 20 years.
- USA (https://tradingeconomics.com/united-states/wage-growth): Averaged about 4% for past 20 years.
- Australia (https://tradingeconomics.com/australia/wage-growth): Falling from about 4% to about 2% for past 20 years.
- Canada (https://tradingeconomics.com/canada/wage-growth): Averaging about 2.5% for past 20 years.
- UK (https://tradingeconomics.com/united-kingdom/wage-growth): Falling from about 4% to about 2% for past 20 years.

But we all know property price growth is far outstripping these wages growth figures many times over.

And based on the above housing price affordability is deteriorating worse in say New Zealand and Canada than in Australia.

And based on the table you provided above, the poor Kiwis are starting from an even worse housing affordability base than us, so they're getting hammered. No wonder they just starting taxing capital gains and removed the tax deductibility of interest on investment property loans...

Something from my recent facey feed... (shakes head)

indo-dreaming wrote:

There is still some very affordable properties around Australia if you take a different mind set.

More a buy a house in an area that you could also one day see yourself living or spending time, meanwhile while your life is happening somewhere else where property is expensive you just rent it out, and ideally the rent comes close to covering the loan repayments.

So quick search on realestate.com

Random area (down towards Sheepdogs way but still in Vic)

Portland few waves and not too crowded, black nose on big swells, plenty of coast to explore east and west.

God, how cheap is land down there, 500m from bay beach that looks pretty nice in pics $30K for a 879m2 block (that's twice the size of many house blocks these days)

Houses 3 bed from $115K, 2 bed units from $85K

Rents from about $200 a week upwards for houses.

Yeah yeah i know its not near a city and possibly not much work.

But just an example.

indo-dreaming wrote:

There is still some very affordable properties around Australia if you take a different mind set.

More a buy a house in an area that you could also one day see yourself living or spending time, meanwhile while your life is happening somewhere else where property is expensive you just rent it out, and ideally the rent comes close to covering the loan repayments.

So quick search on realestate.com

Random area (down towards Sheepdogs way but still in Vic)

Portland few waves and not too crowded, black nose on big swells, plenty of coast to explore east and west.

God, how cheap is land down there, 500m from bay beach that looks pretty nice in pics $30K for a 879m2 block (that's twice the size of many house blocks these days)

Houses 3 bed from $115K, 2 bed units from $85K

Rents from about $200 a week upwards for houses.

Yeah yeah i know its not near a city and possibly not much work.

But just an example.

Some good marketing there for the town, the council would like that, maybe not the surfers so much. Far from a secret spot but still..

@Sando1

Shit that interesting to look at my old post from a few years back, wish i had bought something down there.

Even in the last few weeks that land price has jumped as the last dirt cheap blocks(even with issues have been sold) 70K now is the new starting price just for land

And god you sure don't get houses or units for that now, easily double that.

Anyway better go chase this big hoax of a swell with the rest of Victoria and surf some 2 to 3fft crappy hidey hole that protected from the howling SW.

@gsco

Exactly housing affordability is deteriorating across all developed countries, it still would have happened under any government in Australia. (sure we can debate about how much less or how much more)

Personally i cant see how it's escapable it's a product of supply and demand and the success of developing countries. (success among population never being equal)

I don't see how wage growth is that relevant to affordability, wouldn't wage growth just fuel higher property prices because people could borrow more, but even then end of the day it wouldn't make housing more affordable or less affordable, it just shifts the bar with prices of both wages and housing pricing moving upwards the balance doesn't change people pay what they can afford to borrow.

It's kind of like the first home owners grant, government give people say 10K towards their first home and all it does is push prices up by 10K, nobody is really much better off (unless you are a real estate agent)

And then the bigger the wage & real estate price increases the more it benefits those who already own property as they already have smaller loans for property that is then worth much more, so it's easy for them to borrow more and pay back more on a loan (especially when someone renting your place is paying off much of your loan)

Not to mention the flip side of any substantial wage increase would be more jobs would go offshore especially lower paid low skilled jobs further disadvantaging many.

Id expect that's in part why developed country governments are in a sense happy to see wage growth low even though wage growth has positive aspect for the economy, especially in Aust where we already have the second highest min wage in the world (was the highest a year or two ago)

In a perfect world average and min wages between countries would be as close as possible the long term aim should be to reduce the gap between average/min wages in developed and developing countries, which although would mean an increase in the price of much imported goods, would also make many industries in Australia much more viable and our exports more attractive to other countries..

But hey i admit i could be wrong I'm looking at it all from a complete layman's outlook and you do seem to have knowledge in this area, so maybe im totally missing something.

In my mind, the kind of wild house price growth we're seeing is only made possible by policy settings: negative gearing, CGT concessions, lack of rental protections, deregulated short stay markets, record low interest rates etc. Every piece of policy that makes a house an attractive form of investment creates unsustainable demand for homes, mostly to the detriment of people who have no home of their own. Supply and demand, yes, but demand will always outstrip supply if the policy settings encourage speculation. If it was less attractive, wealth seekers would shift their capital to something that returned more money.

@indo

I think your logic is correct and you make the right points.

The reason I keep mentioning wages is that housing affordability is typically defined as a ratio of some kind of measure of house prices or cost divided by some kind of measure of wages:
- median or mean house prices / median or mean annual or weekly wages,
- median or mean deposit required / median or mean annual or weekly wages,
- median or mean monthly or weekly loan repayments / median or mean monthly or weekly wages.

Sometimes the wages figures used are not total wages but what's left over after purchases of "essential items" are taken out. Furthermore, these measures are typically broken down into "lower" vs "middle" vs "upper" class affordability, city vs regional affordability, house vs unit affordability, etc.

Deposit required is a function of house price and current lending standards. Loan repayments are a function of house price and interest rates. Consequently, the main measure of housing affordability typically cited is house prices / wages.

So by definition housing affordability deteriorates when house prices and/or loan repayments go up faster than or relative to wages.

In this light, some reasons why housing affordability has deteriorated might include:
- previously relaxed deposit requirements and other lending standards getting tightened over time,
- people being more willing to allocate a greater proportion of their wages to loan repayments, making it harder for those unable to do this,
- more households having dual incomes, making it harder for single income households,
- those already in the market and/or with "spare" equity and/or disposable income buying (particularly investing), i.e. the rich getting richer and the poor getting the picture,
- buying and investing in realestate becoming Australia's national sport,
- negative gearing and other tax incentives for investing in property making it hard for non-investors/owner-occupiers who don't get these advantages,
- one-off govt grants and incentives iterating house prices that some people are unable to take advantage of at the time (e.g. current HomeBuilder grant),
- limited supply of houses relative to economic growth and/or population growth particularly via high levels immigration,
- allowing in a large and sustained inflow of relatively wealthy migrants (and returning expats during covid),
- allowing foreign buyers quite open access to our property markets, particularly foreign development companies with deep pockets and very cashed up/wealthy Chinese buyers,
- purely speculative increases in house prices,
- etc...

(You already mentioned some of these points.)

Good post, i think you pretty much covered everything there.

Some more commentary: https://theconversation.com/home-prices-are-climbing-alright-but-not-for...

They give an interesting graph of housing prices as proportion of household disposable income, showing Australia's long term trend in falling ownership affordability.

They also give an interesting graph showing that wages are growing faster than rent prices, so renting has become more affordable over the years.

The general conclusion is house prices are going up, ownership affordability has trending down, and renting affordability has trended up, due to investor activity buying houses to rent them out while taking advantage of negative gearing and speculating on price increases, so that the house prices rises are not due to house supply shortages...

But nothing new here...

Dangerous ground to tread there gsco, suggesting not only that there are factors other than immigration causing high prices, but going so far as to suggest immigration isn't much of a factor as well.

Interesting article though.

where exactly did it suggest that JQ?

It suggests that supply is not much of an issue, which would then imply that immigration is not much of an issue either - foreign investment though, different story.

i think your interpretation is incorrect. and i think the author would agree given his previous publications and associations. i agree with the article findings
but to imply immigration is a negligible factor is an overstep.

you are dismissing 1. record immigration growth over the last 20-30 years. 2. recently released restrained demand from 1st home buyers 3. the unknown replacement of pre covid immigration with returning expats and their impact on housing demand / prices.

current (pre-covid and soon to be post covid) Immigration levels are not the only factor on housing prices and demand but they are a significant factor.

Ssando1 re pland re, you must of read a very old newspaper,
Real estate down there, WAY over priced imho.

Sounds like you’ve got an axe to grind JQ.

Appoligies for triple post,.
Anyway was out plands secret spot last sunday...fun.
Many years have past since last visit, bitumen road and viewing platform...goodjob.
Wots with the tank traps either side of road about 10mtrs apart?
And why no toilets?

We love to over-complicate things. The simplest answer is often the correct one.

In short:

(1) Wages have stagnated because of loss of bargaining power (specifically, collective bargaining), and suppressed labour competition (via offshoring and high immigration). Reverse just one of these and we'll see upwards pressure on wages (and we may see this in corporate sector in the next 12 months thanks to COVID travel restrictions). Reverse both and wages go gangbusters (and eventually so does inflation).

Talk of 'productivity/output' is just a neoliberal narrative misdirection talking point.

(2) Asset prices have gone up because money is cheap. And I'm primarily referring to the creation of money not backed by anything, though the effect of MMT post-GFC on rates has thrown a shitload of gasoline on things.

The Fed's woefully lame attempt at convincing people a return to the gold standard is not the panacea we're looking for (see if you can spot the logical failings in there). In other words: "stop asking questions and just keep buying assets you plebians!" https://www.stlouisfed.org/on-the-economy/2014/august/the-gold-standard-...

(3) Perverse incentives. gsco's list above has a bunch of them, as have posts by others. To me the most egregious set are governance related, specifically the insane amount of conflict of interest our elected representatives have. The below article (other sources are easy to find, if you dislike The Guardian) illustrates this, and points out that we're likely only seeing the tip of the iceberg. https://www.theguardian.com/australia-news/2019/aug/01/one-in-three-aust...

In short, many pollies have personal financial incentives to NOT pursue policies that are likely to reduce asset values. Normally if a Member has a conflict of interest, and there's a vote on something related, they recuse themselves (or at least should). But if enough Members have a disincentive for curtailing asset prices, then they make those decisions as a collective and it's called 'party policy'. This applies to real estate but also other investments (namely, business equity).

''Always back the horse named self-interest, son. It'll be the only one trying.''

Regarding the supply and demand part of the debate, it isn’t about the supply and demand of land and houses, it is the supply and demand of MONEY that causes the house prices to go up. A few years ago they put the brakes on investment loans and the price of houses was stagnant or dropping in many markets. The real estate agents had a conniption, as fat and lazy and grafting an industry as ever there was.

MMT is not a factor in the current rise in house prices. Return to a gold standard will never happen, and it’s irrelevant anyway. Current problem is that there is a lot of cash blowing around with very few places to put that cash that will bring about reasonable returns. That’s why it’s all heading for property and sharemarkets, all artificially inflated by government and RBA policy.

There’s a long term price to pay for all this, just a matter of when.

Was interesting to read recently that both the RBA and ASIC announced that the overheated property market wasn’t their problem. Not only asleep at the wheel, they claim they’re not even in the car.

batfink wrote:

MMT is not a factor in the current rise in house prices. Return to a gold standard will never happen, and it’s irrelevant anyway. Current problem is that there is a lot of cash blowing around with very few places to put that cash that will bring about reasonable returns. That’s why it’s all heading for property and sharemarkets, all artificially inflated by government and RBA policy.

Eh? The first sentence is in conflict with your third and fourth sentences. If you said "MMT is not the only factor..", then I would agree with you. But sayings it's not a factor (at all) puts you in conflict with every economist I've heard interviewed on the subject. Are you an economist batfink, or did you study macro economics?

Well, MMT hasn’t been used at all in any facet in Australia. Recent moves by the RBA to buy up govt bonds on the secondary market are the first examples that MMT is being implemented in Australia, but it isn’t clear cut. To be an actual example of MMT the RBA would have to write off the debt. Effectively it doesn’t matter, because the govt owing money to the RBA is equivalent to Dad borrowing money off Mum.

We didn’t do ‘quantitative easing’ as a reaction to the GFC, so thus far we haven’t put our toe in the water.

So unless someone wants to argue that a slight change in policy in the last 3 months explains the last 40 years of real estate madness we have been going through, then they will have their work cut out for them.

As for the money sloshing around, it is there, but it doesn’t come from MMT. It largely comes from bereft institutional mismanagement from the RBA and ASIC, and govt policy. It is a product of fractional banking, which is a mind boggling way that our banking system works. When unchecked by central institutions, banks go for easy profit.

So a lot of the money that is sloshing around isn’t even money, it’s debt, for households. The money that is sloshing around is mostly from superannuation. We have trillions of dollars in super accounts looking for somewhere to go, and the only things paying any sort of returns is property and sharemarkets, so a bubble is inflating a bubble.

I’ve been studying macro and micro economics for about 40 years now.

No Australian economist is saying that property prices are going up because of MMT.

You have to separate what is happening overseas to what is happening here.

Feel free to let me know of any examples of MMT being used in Australia, other than recent moves by the RBA to buy govt bonds on the secondary market.

By the way Sypkan , MMT isn’t a lefty concept, it is an economic theory that has much to offer. It’s biggest drawback is that if politicians were smart enough to understand it they would go crazy and spend like drunken, well, LNP governments.

A lot of the stimulus measures for Covid were poorly spent. The unemployment benefit rise was well spent, that is all in the pockets of businesses and landlords now. The JobKeeper was a bit of a joke, and was used as such by plenty of multi-billionaires.

"By the way Sypkan , MMT isn’t a lefty concept"

Does anyone remember in the 90s when Pauline Hanson suggested printing more money to pay off foreign debt etc?

But got ridiculed by all sides of politics and media because it would obviously cause inflation.

Not saying she even knew what MMT was but still.

I do think MMT is a bit of a leftie concept though because isn't it what many socialist countries have done at some stage and in many cases caused hyperinflation?

Isn’t it the US that has the gold medal for printing money these days?

MMT = magic money tree. Economics 101: there is no free lunch

Interesting.

It could be viewed that there is nothing new with MMT in that its ideas are debated within traditional monetary theory and that it has been flirted with many times historically with its predictions tested and proven to be wrong on every occasion...

Over the past few thousand years, many govts/empires etc have rotated through all three kinds of monetary systems: hard currency (a commodity like gold), paper currency backed by a commodity, and fiat currency.

MMT has been trialled many times over the past few thousand years in fiat money systems - at the time they just didn't call it MMT...

The main failure of MMT historically is that it gave empires/govts unbridled spending ability and resulted in entire empires/govts falling and often vanishing due to significantly debasing their currencies and overall monetary and economic systems.

Proponents of MMT claim that "things would be different this time"... I would argue they think this because no-one alive today has experienced the consequences of free rein MMT in their lifetimes.

This conversation could get really interesting, seems both batfink & gsco are well educated in the area of money/finance/economy/real estate etc but share completely different views on MMT.

That's what gets me with MMT even those educated in this area don't seem to agree and often seem to have very strong views on the topic either way.

To me (who is completely clueless in this area), even when i get my head around the concept and understand that it probably works to degree if very carefully managed, it seems like it could also go very wrong if pushed too far.