• turnip@sh.itjust.works
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    4 days ago

    House prices rise to max out available credit. If that credit vanishes then prices will fall, as people need to save their own money to buy, and they don’t benefit from the cantillon effect raising asset values.

    House prices are inversely correlated with interest rates, and housing bubbles popup wherever QE is done as a mortgage is a net short position on the purchasing power of cash.