14 votes

Freeman's Perspective: Why society has not improved since 1905

Why Can't We Party Like It's 1905?

FREEMANSPERSPECTIVE · Jul 16th, 2013

When writing historical things, I try to include perspective from people who actually lived through the events. And for money issues in the US, I’m able to do that back to about 1905.

So, do you think life was nasty, brutish, and short in 1905? That there were poor and starving people falling dead on every street corner?

Hardly.

The Wright brothers were flying for 30 minutes at a crack; Einstein was upgrading the laws of physics; telephones and electric lights were being installed all across America; Henry Ford was getting the final pieces in place for his moving assembly line and Model T; radio was being developed; art was flourishing; and the world was more or less at peace.

Sure, we have far more tech and better medicine now, but mostly because the people of earlier times (like the 1905 era) gifted it to us.

People in 1905 lived in heated homes, refrigerated their food, had access to professional physicians, traveled the world (mostly on trains and ships), read daily newspapers (there were many more of them in those days), watched movies, and ate just about the same foods we eat.

So, was it really that bad a time?

No, it wasn't. In fact, it was better in important ways.

Continue reading:
http://www.freemansperspective.com/money-issues-in-the-us/



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It's almost as if

they made up all these confiscatory taxes specifically to hamstring the productive, law-abiding middle class so that the ruling class could run the country, (and now the world), unimpeded.

But that would be a stretch. Before you know it someone will accuse them of spying on us.

No Private Property in the United States Today

That's the problem. The Birth Certificate and Social Secirity applications are trust documents which turn over your inheritance, your body, and your life's labor to the communist state, State of United States (Washington D.C. City State). Before 1913 the fourty-eight countries in North America still had a Republican form of government.
The establishment of the Federal Reserve and funding it by tricking people into pledging themselves and their property to the Fed by birth certificates and SS applications is what created the current mess. No one can own anything in a democracy because first to enter a democracy one must pledge all his property and rights to the State.
Then the membership hold a vote to see who gets your property! Brilliant!
We were simply misled and tempted into joining a communist state and leaving behind the prosperity that we had when we owned our bodies, land, and labor as private property.
You must get your property back out of the SS and birth trusts, otherwise the foreign bankrupt communist State of United States will continue to print Dollar Shares of your body, land, labor until you are actually completely "shared out" and owned by foreign creditors.
The Fed Spends People. They have title to your body, land, children, life's labor.
Why did you agree to that?
That is why "society" has not improved. A different "society" was created, an unlawful communist state.
Don't like Congress promising your property to others?
So why did you entrust it to them?
Take it out of the BC and SS trusts and return to the Republic State where you live instead of entrusting your property to the foreign communist state in D.C./a City of London Crown subsidiary.

How many times do I need to tell you this. You own nothing if you have a U. S. citizenship, it is a communist state. Your very life is property of a foreign communist state.
If you don't like that, stop whining and collapse your SS and BC trusts and get back your lands, body, money.
Go back to private property and prosperity and peace.

The Oracle

You can't get "your" property

You can't get "your" property back out from these systems because they were never yours long before you came around, and using "your" is pretty inaccurate from the get-go. You don't have to agree to it. All it took was for your ancestors to agree to it. They locked you into it, and there's nothing you can do. Your ancestors signed away the land back to the state. You also can't just give up your citizenship and become some countryless person.

Legally and politically there is nothing anyone can do. Nothing is going to change without violent revolution, and that simply won't happen either.

Sovereign gibberish talk is also going to do nothing for the world but land people in prison. I NEVER get any real answers from you types on how to accomplish all of this nonsense you claim you avoid or remove yourselves from...just nothing but using language as confusing as law. You talk down to everyone and avoid answering questions. If you cared about other people and freedom you would help them by first using plain normal American English and posting examples and explaining them in normal talk. Instead, you just sit up on your high horse of confusing language and act offended when people have no clue how to get out of this system. I think you're either selfish, or it's all made-up BS and you people have US citizenship and pay your income taxes.

The only way to have property is to die. To hole yourself up in your house and refuse to pay taxes and other crap, then wait for them to come arrest you, and just start a firefight with them until you lose.

Please come join my forum if you're not a trendy and agree with my points of view.

Absolute nonsense of an

Absolute nonsense of an article. Even given the tremendous rise in property values due to limited supply, the average American can purchase with his money a hundred thousand times more, in absolutist terms, and 4-5x more, in relative terms, than his counterpart in the early 1900s.

The savings rate is plummeted becasue people no longer need to save to spend. Earlier, if you wanted to go to college, you had to save. Now, you can just borrow the money.

Plus, he's forgetting all the social issues. Freedom was way, way, way less then. Sure, Federal taxes were lower. But state taxes were high, import taxes were high, and social laws were incredibly restrictive.

If you were a rich, White, property-owning male, then you loved it. You used government to crush foreign competitors. You use tax laws to make sure government collected its revenue off people buying essential goods (and not on your high income). You also made it so that only your voice could influence government, therefore ensuring government reflected your desires. Lastly, with the money supply so tight, you also controlled the fate of people who needed to borrow money.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

Are you seriously trying to

Are you seriously trying to say people couldn't borrow money in 1905? People absolutely could borrow money then. However, since the banking industry was nowhere near as cartelized as it is today, banks had to actually follow free market guidelines to run their businesses profitably. Hence, they had to be much more discriminatory(and not racially, since race seems to be something on which you like to focus) in their lending practices. Therefore, fewer people qualified for loans, and people saved. But as this excellent article correctly points out, people saved more than half their paychecks, and what it doesn't point out is that then their money was tied directly to gold, so their money appreciated in value, i.e. bought more tomorrow, as opposed to bought less tomorrow.

Today, the Fed prints money daily, people know asset prices will continually rise in the long term because the money buys less(not due to limited supply, what are you even talking about?), hence there is no reason to save, since their money will buy less tomorrow.

Almost nothing you just said makes any sense. Perhaps you should do a little more studying, formulate some honest well researched opinions, before you start mashing away at the keyboard. LewRockwell.com has a lot of great articles on the basics of economics, LibertyClassroom.com has a great course on Austrian Economics and American History.

Of course people could borrow

Of course people could borrow money in 1905. But because of high interest rates, it is hard to do so. Same with having deflation; the value of your loan goes up each year. Just like, you CAN go into outer space if you want to. The high cost just makes it practically impossible for most people.

The free market guidelines you tout specifically forced banks to charge high interest rates because they had so little money to spread around.

People today save by putting their money in social security, 401ks, the stock market. That money also appreciates very well. A gold stanard might have the benefit of helping savings, but it hurts loans, as aforementioned since the principle of a loan essentially goes up every year with deflation.

"Today, the Fed prints money daily, people know asset prices will continually rise in the long term because the money buys less(not due to limited supply, what are you even talking about?), hence there is no reason to save, since their money will buy less tomorrow."

People generally now assume that there will be modest inflation each year, which is exactly what the Federal Reserve wants. By having something that is predictable and stable, it is good for the economy. Having it up and down isn't.

FYI, the federal reserve, before quantitative easing, only printed enough money to cause modest inflation each year. Borrowing money is different from printinv money.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

What were the tariff rates in 1905 ...

... and on what products?

What percentage of the average American's income was paid in tariffs (keeping in mind that tariffs are at wholesale import prices)?

How high were state taxes? Which states?

What were average property prices in 1905?

Why do you say there was a limited supply of property, given there was a much smaller population and the exact same land area?

In what way was freedom way less in 1905?

Since there was no central bank in 1905, what evidence do you have that money supply was tight?

:... and on what

:... and on what products?:

For example, alcohol taxes were very common back then.

:"What percentage of the average American's income was paid in tariffs (keeping in mind that tariffs are at wholesale import prices)?"

Income is very hard to define given the time period. Reported levels were 9% of GDP. We can approximate that total taxation was at around 19% of GDP, with the vast bulk of that being state/local. Federal information is the only one with certainty; this is about 3%. In comparison, outside of social insurance taxes, taxation is at around 25-26% nowadays.

"How high were state taxes? Which states?"

Again, state income tax data is very hard to know. Federal tax data was reported, as was ad-valorem state taxes. However, there are papers that indicate that states like California, New Jersey, New York, and Vermont (IIRC) had income and property taxes. Whiskey tax information was not reported, but has existed in several states dating back to colonial times.

"What were average property prices in 1905? "

Between 2500 and 5000, IIRC, depending on how it was calculated. With GDP/capita at 750/year, you would need to work between 3.3 and 6.7 years.

Property prices today are 225,000. Earning GDP/capita, you'd have to
work 4.5 years to own your house. Of course, this ignores the fact that home prices have not grown evenly throughout the country. In parts of California, you'd have to work 10 times as long now...

"Why do you say there was a limited supply of property, given there was a much smaller population and the exact same land area?"

I believe the limited supply was referring to now. Population is going up, demand is going up, and only so many homes are being built.

"In what way was freedom way less in 1905?"

Social freedoms. More than half the country couldn't vote, had fewer civil rights, etc. I could go into more details, but this should be very obvious.

"Since there was no central bank in 1905, what evidence do you have that money supply was tight?"

Even without a central bank, there is still a money supply. The money supply is controlled by market forces, and the law. With bank-notes (that had pretty much died down back then), money was only fractioned as much as banks wanted it to. In US dollars, money was fractioned at 25%. So the money supply could be, in theory, 4 times as much as the amount of gold that was backing the money supply. Of course, without today's technology, banks had to have more in hand.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

I asked about tariffs ...

... and you gave me alcohol.

"For example, alcohol taxes were very common back then."

Are you talking about tariffs on imported alcohol? If so what was the tariff rate? What percentage of a person's income (average $4,200 per year in 1905) went to these tariffs?

Remember, alcohol produced within the USA had zero tariffs, and imports were on wholesale prices, not retail.

"Income is very hard to define given the time period."

I posted a link showing the median income was $4,200 per year.

"Reported levels were 9% of GDP. We can approximate that total taxation was at around 19% of GDP, with the vast bulk of that being state/local."

You will have to cite a source for that because I do not agree we can just approximate such a thing.

"Federal information is the only one with certainty; this is about 3%. In comparison, outside of social insurance taxes, taxation is at around 25-26% nowadays."

Do I get to ignore my taxes that are for social insurance? No? Then let's not arbitrarily exclude anything from the calculations. Yes, it would help your argument, but it is dishonest.

"Again, state income tax data is very hard to know."

Well, YOU are the one who made the claim that state income taxes were high. Now you say you have no idea what they were. That's what I thought, since such taxes were either mostly or entirely non-existent, and your claim was made up.

"[Housing prices were] Between 2500 and 5000, IIRC, depending on how it was calculated. With GDP/capita at 750/year, you would need to work between 3.3 and 6.7 years."

Now you are engaging in false claims by mixing concepts. People do not buy things with their "GDP per capita." No, they buy them with cash or financing and that comes from median income, not per capita GDP.

Your $2,500 - 5,000 figure for housing sounds about right, as 40 times that is about $100,000 - $200,000 today. According to my previous link, that would be in the general neighborhood.

However MEDIAN INCOME back then was $4,200 per year. The AVERAGE person could save up and PAY CASH for a home within a few years.

The average person cannot do that today with a median income of around $26,000.

"Property prices today are 225,000. Earning GDP/capita, you'd have to
work 4.5 years to own your house."

Wrong. First, median income today is $26,000 and that is ... BEFORE INCOME TAXES. To buy a $225,000 house it would take almost 9 years, and that assumes the person does not spend a penny on anything else, which is not how life works.

In 1905, the median income was $4,200 (with ZERO income taxes), so it would only take a little over a year to save up to pay cash for a $5,000 home, or just 7 months if your $2,500 figure is more accurate.

"Social freedoms. More than half the country couldn't vote, had fewer civil rights, etc. I could go into more details, but this should be very obvious."

OK, I'll agree with you about voting, but then voting is vastly overrated as a "right," and certainly says nothing about day-to-day freedom since your vote does nothing to guarantee any politician will not pass NDAA or spy on you or any number of other things that directly affect your freedom.

"Even without a central bank, there is still a money supply. The money supply is controlled by market forces, and the law. With bank-notes (that had pretty much died down back then), money was only fractioned as much as banks wanted it to. In US dollars, money was fractioned at 25%. So the money supply could be, in theory, 4 times as much as the amount of gold that was backing the money supply. Of course, without today's technology, banks had to have more in hand."

OK, but that seems more like a "normal" money supply and not a "tight" money supply. That is, unless you use today's super-loose system as a standard of "normal."

"Are you talking about

"Are you talking about tariffs on imported alcohol? If so what was the tariff rate? What percentage of a person's income (average $4,200 per year in 1905) went to these tariffs?"

Aha! You have made a critical mistake, by not reading properly. In 1900 (not 1910), per capita income was 4,200 (by the by, the article you listed? It is using gdp per captita and just calling it income) was based on 1999 dollars.

In any case, about 3% of GDP went to federal tarrifs. However, we know that this number was closer to 10% in 1790, by comparison.

"I posted a link showing the median income was $4,200 per year."

A link, which, apparently, you did not read. Just giving you a hard time, I understand that sometimes things slip past us.

"You will have to cite a source for that because I do not agree we can just approximate such a thing."

The 9% comes from published US statistics on tax collection. The 19% comes from approximating state taxes levied accross the population. I believe you can get both as USgovernmentrevenue.com

"Do I get to ignore my taxes that are for social insurance? No? Then let's not arbitrarily exclude anything from the calculations. Yes, it would help your argument, but it is dishonest."

The reason being that you get social insurance taxes back. The money you put into social security is directly handed back to you in the form of a social security check. It doesn't disappear into different things like the income tax. But, whatever.

"Well, YOU are the one who made the claim that state income taxes were high. Now you say you have no idea what they were. That's what I thought, since such taxes were either mostly or entirely non-existent, and your claim was made up."

We can gather than from the fact that when published, we see tax rates in excess of 5 and even 10%. Current studies tend to then say that "well, if North Carolina had a 10% alcohol tax, California must have had between 5% and 15%!". There is no guarantee of that. But it is all that we have.

Like, for example, we know that during the civil war to the 1900s, many states implemented an income tax. But, we don't know how much or what percent.

"Now you are engaging in false claims by mixing concepts. People do not buy things with their 'GDP per capita.' No, they buy them with cash or financing and that comes from median income, not per capital GDP."

To be fair, the article you posted is talking in terms of GDP/capita. The reason being, that actual "personal income" was not collected until the modern era. Now, they can separate person income with corporate income, foreign income, etc. OF course, the calculation of GDP is also much more accurate nowadays. Not estimated as it is for past years.

"Your $2,500 - 5,000 figure for housing sounds about right, as 40 times that is about $100,000 - $200,000 today. According to my previous link, that would be in the general neighborhood."

Yes, but it was 2500-5000 in 1910 dollars, not 1999 dollars.

"However MEDIAN INCOME back then was $4,200 per year. The AVERAGE person could save up and PAY CASH for a home within a few years."

Again, no.

"The average person cannot do that today with a median income of around $26,000.

Again, your 4,200 is an average. The average income today is 39,000. GDP/capita is 49,000. Median is 26,000 (in 2010). If you used the median income in 1910 (Average was 750), I am sure it would be even lower because of even greater wealth inequality.

"Wrong. First, median income today is $26,000 and that is ... BEFORE INCOME TAXES. To buy a $225,000 house it would take almost 9 years, and that assumes the person does not spend a penny on anything else, which is not how life works."

This may be correct, but then the time for someone in 1910 will also go up by a lot. Use the same standard.

"In 1905, the median income was $4,200 (with ZERO income taxes), so it would only take a little over a year to save up to pay cash for a $5,000 home, or just 7 months if your $2,500 figure is more accurate."

Again, your 4,200 number is wrong, wrong wrong.

"OK, I'll agree with you about voting, but then voting is vastly overrated as a "right," and certainly says nothing about day-to-day freedom since your vote does nothing to guarantee any politician will not pass NDAA or spy on you or any number of other things that directly affect your freedom."

Only someone who doesn't know what it is like to not have these overrated rights can so easily spit on it. That is how I see it.

"OK, but that seems more like a "normal" money supply and not a "tight" money supply. That is, unless you use today's super-loose system as a standard of "normal.""

It is tight relative to the system we've had since the 1930s. I wouldn't call that normal since no one has that kind of money supply anymore.

Look, we've definitely gone too lose. But the solution is not to go back to a super tight system. After all, giving the banks the ability to create money based on future income led to a tremendous economic boom from 1930 to now. Even with the occasional hiccups.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

Just saw this post ...

... and I'll respond. Then, I have to take off.

"Aha! You have made a critical mistake, by not reading properly. In 1900 (not 1910), per capita income was 4,200 (by the by, the article you listed? It is using gdp per captita and just calling it income) was based on 1999 dollars."

Well, if I make a mistake I am happy that someone points it out. My standard is truth, not my own view of truth.

Having said that and looked at the article a little closer, we can see that my point is still valid: housing prices have increased FAR in excess of income since 1905.

Using 1999 dollars from that article, income is up about 8x rather than 4x (1909-1999), and this compares to 40x increase in housing prices (1905-2010).

Here is a graph showing Average Income 1913-2006:

http://visualizingeconomics.com/blog/2008/05/04/average-inco...

It's about a 3x increase. I assume those are 2006-based numbers.

The graph is also interesting in that the big increase was 1944-1974. Other than that era, incomes have been mostly flat.

Whether the most accurate numbers are 3x, 4x, or 8x, the point is still valid: increase in real estate prices have FAR exceeded increase in income.

If you have better numbers, let me know.

"The 9% comes from published US statistics on tax collection. The 19% comes from approximating state taxes levied accross the population. I believe you can get both as USgovernmentrevenue.com"

I will need to see something more specific to believe it. I think you are wrong about government taxation being that high in 1905. If you can show I'm wrong, please do so.

"The reason being that you get social insurance taxes back. The money you put into social security is directly handed back to you in the form of a social security check. It doesn't disappear into different things like the income tax. But, whatever."

Social Security is a ponzi scheme. You NEVER get your money back. You get a WELFARE payment from the government. Look up FDR's original claims that he made to the public vs. what he was claiming in the courts when it was challenged. It is and always was a WELFARE program, not a retirement pension.

And the money DOES go for other things. It is just an accounting entry, no different that moving money from savings to checking and back (this is how there was a so-called budget "surplus" during the Clinton years).

And besides, it is part of the total cost of government, so it should be included when we are talking about the cost of government.

"We can gather than from the fact that when published, we see tax rates in excess of 5 and even 10%. Current studies tend to then say that "well, if North Carolina had a 10% alcohol tax, California must have had between 5% and 15%!". There is no guarantee of that. But it is all that we have."

Pick a state, any state. Show me what the STATE INCOME TAX was in 1905. Your claim is that these rates were high. Prove it.

"Like, for example, we know that during the civil war to the 1900s, many states implemented an income tax. But, we don't know how much or what percent."

I've already explained that these were property taxes, calculated on the "income derived from" the property rather than the property's value. This is why the 16th Amendment is written as it is. Anyway, just pick a state and show what the income tax was in 1905.

And since you also claimed that 1905 was a great time for rich white folk, let's not forget that a property tax based on income is ONLY for rich (mostly white) folk, not the middle class or poor. So, you should probably reconcile the disconnect between high state taxes that only apply to wealthy land owners and how great they had it.

"Only someone who doesn't know what it is like to not have these overrated rights can so easily spit on it. That is how I see it."

I lived in another country for awhile. I had no right to vote. The one right I did have was to leave and go to another country if I wanted to. That was the only right I needed (and one that is slowly closing on Americans). Voting was irrelevant in my life regarding my freedom to live my life.

"Look, we've definitely gone too lose. But the solution is not to go back to a super tight system. After all, giving the banks the ability to create money based on future income led to a tremendous economic boom from 1930 to now. Even with the occasional hiccups."

But it can't last forever. That is the problem. You can only borrow up to a point. You start out paying cash only for a house. Then, you can get a 5-year mortgage with 50% down. Then, you can get a 20-year mortgage with 20% down. Then, you can get a 40-year interest-only negative amortizing loan with no income verification and bad credit. Then ... you are screwed, because there are no more fools left.

The same is true of socialism. The great socialist experiment in Europe is crashing. Borrowing and spending, loose money, socialist policies can only go on until the system is bankrupt.

A REAL free market is the solution, just as is has been in all those technological advances we both love.

Gotta go.

Ciao.

"Using 1999 dollars from that

"Using 1999 dollars from that article, income is up about 8x rather than 4x (1909-1999), and this compares to 40x increase in housing prices (1905-2010)."

I think>/i> you are mixing up your statitics. You are saying that in terms of 1999 dollars, income has gone up 8x. But then you are using normal dollars to look at the increase in housing. That is where you are getting your disconnect.

Income was 750 in 1910 and whatever you say it is in 2010. Home price was 2500 to 5000 in 1910 and 225,000 in 2010 (give or take).

"It's about a 3x increase. I assume those are 2006-based numbers.

The graph is also interesting in that the big increase was 1944-1974. Other than that era, incomes have been mostly flat."

Yes. Because from ~1980, wages are actually very even with inflation. However, costs have come down. From 1933 to 1970, wages went up > inflation AND production costs went down. Reaganomics improved lowered production costs but also hit wage growth.

"Whether the most accurate numbers are 3x, 4x, or 8x, the point is still valid: increase in real estate prices have FAR exceeded increase in income.

If you have better numbers, let me know. "

Like I said above, the average income has gone fomr 750(which is just GDP/capita) to your pessimistic 30,000. Which, is 40x. Home prices have gone from 100x to about 50x, depending on the numbe rou believe in from 1910.

On state taxes:

http://www.foxbusiness.com/personal-finance/2011/08/25/snaps...

http://www.taxhistory.org/www/website.nsf/Web/THM1777

http://www.accountanttown.com/site/history-of-taxation-in-th...

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

Dr. No ...

... just a little online search shows that you are wrong about home price affordability.

From about 1905 - 2010, housing prices are up 40 times, but income is only up about 6 times. Meaning, it is A LOT harder to own the median priced home today than it was in 1905. The big difference, of course, is financing (which was started by the federal government via FHA and today is controlled by government).

http://3.bp.blogspot.com/-ynrQyoAUzgM/UKvzBPEFGMI/AAAAAAAABg...

http://www.bls.gov/opub/cwc/cm20030124ar02p1.htm

http://www.washingtonpost.com/blogs/wonkblog/post/the-median...

I suspect that most of the other things you wrote in your post are also not true, but I am interested in seeing any evidence or sound argument you have to support your position.

My post specifically

My post specifically mentioned that housing had increased.

The reason that housing prices are so high, is that as prosperity has increased, so has demand for housing. Back in 1905, many people simply did not aspire to be in homes. Everyone aspires to be there now. Moreover, people aspire to be in America more than anything. That wasn't the case back then.

True, financing plays a large part by giving people money they do not have. But you look through history; for most of American history, financing to buy your home was a very good decision.

With other things, like food, technology, etc. The market has innovated very well to overcome the huge rise in demand. It became much cheaper to make these things due to those innovations.

Housing has not had that same thing happen to it. Supply of housing is relatively fixed. There is no frontier to expand to.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

Complete nonsense ...

... you are just making things up and expecting people to believe it.

Everything you have said is wrong, in many cases the opposite of the truth. Nobody can be that uniformed and unwilling to do the most basic of research. Therefore, I conclude that you are purposely and knowingly trying to claim things that are not true.

In 1905, home ownership was about 50%, not far from historical norms. It wasn't until after WWII that homeownership rates exceeded 60% where they remain today. The primary reason for this is government: first government financing which is by far the #1 factor in any economy, and second through tax laws making mortgage interest deductible (something irrelevant in 1905 when there was no income tax).

http://www.census.gov/hhes/www/housing/census/historic/owner...

Contrary to what you imply, through American history home financing was VERY limited. Most people did not finance their homes and the ones who did had 5-year loans, not 30-year negative amortization adjustable.

And housing supply is NOT limited. Ever heard of condos? Live in the sky and there are no limits. Not only that, but the entire world's population could easily live in the land area east of the Mississippi (in single family houses) today. There is plenty of room now, and much more back in 1905.

You still have not answered my questions regarding tariffs, which I assume is because you realize that tariffs (excise taxes on wholesale prices of imports only) is a drop in the bucket when it comes to overall taxation. Income and employment taxation is a MUCH harsher destruction of wealth than are tariffs.

Other than the comforts we have today due to technological advances, Americans had a MUCH HIGHER standard of living in 1905 compared to today.

And one more thing Dr. No ...

... you are also wrong about state income taxes being high in 1905.

Some states as early as colonial times (when they were colonies) had a tax on real estate that was assessed not on property value but on the income generated from that property (such as produce from farm land).

This is not what we would think of today as a state income tax, but a state property tax calculated differently.

I cannot find any reference to modern style state income tax before 1913 other than possibly South Carolina.

So your claim that state income taxes were high in 1905 is just made up. It has no relevance to reality.

https://en.wikipedia.org/wiki/State_income_tax

Having an opinion is one thing. Making up false "facts" to support your opinion is another.

"In 1905, home ownership was

"In 1905, home ownership was about 50%, not far from historical norms. It wasn't until after WWII that homeownership rates exceeded 60% where they remain today. The primary reason for this is government: first government financing which is by far the #1 factor in any economy, and second through tax laws making mortgage interest deductible (something irrelevant in 1905 when there was no income tax)."

First of all, don't round up the number.s 44% in 1910 vs. 66% today. That is a 50% increase. Same amount of land. Much higher number of people.

And, FYI, the government did very little financing. After all, is your mortage issues by the US government, or a bank? The government merely MADE LEGAL the ability of banks to finance.

The home mortage deduction has been present since 1920. We didn't see housing ownership really rise until the 50s...

"And housing supply is NOT limited. Ever heard of condos? Live in the sky and there are no limits. Not only that, but the entire world's population could easily live in the land area east of the Mississippi (in single family houses) today. There is plenty of room now, and much more back in 1905."

Would you be willing to live in such a cramped, crowded, space? How is there more space than in 1905? You think they didn't think of vertically building things in 1905?

I am simply telling you what the market is telling you. People have been willing to accept subpar quality in some things in exchange for lower prices (see, food). But housing does not appear to be one of those things. Or at least, to a lesser extent.

"You still have not answered my questions regarding tariffs, which I assume is because you realize that tariffs (excise taxes on wholesale prices of imports only) is a drop in the bucket when it comes to overall taxation. Income and employment taxation is a MUCH harsher destruction of wealth than are tariffs."

Yes, because it takes TIME TO TYPE IT. Do you want a response in the next 10 minutes? Garbage.

"Other than the comforts we have today due to technological advances, Americans had a MUCH HIGHER standard of living in 1905 compared to today."

Utter nonsense. And, you cannot simply eliminate the comforts we have today, as if they arise independently from society.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

Umm ...

"First of all, don't round up the number.s 44% in 1910 vs. 66% today. That is a 50% increase."

Wrong. That is like saying 2% is 100% more than 1%. No, it's an increase of one percentile.

"And, FYI, the government did very little financing. After all, is your mortage issues by the US government, or a bank? The government merely MADE LEGAL the ability of banks to finance."

Absolutely wrong. Home financing existed but was very limited (large down payments and short payback terms). The big increase in prices began when financing loosened up by allowing smaller down payments and longer repayment terms, and that was from the government's FHA program. Today, the government controls more than 90% of the home mortgage industry via FHA, FNMA, FHMC, and VA.

http://www.thehistoryof.net/history-of-home-mortgages.html

(BTW: You should see a pattern here -- when the government got involved in financing homeownership, real estate prices skyrocketed; when it got involved in financing higher education, college prices skyrocketed; when it got involved in health care, health care prices skyrocketed.)

"The home mortage deduction has been present since 1920. We didn't see housing ownership really rise until the 50s..."

First off, there was no home mortgage deduction in 1905. Second, it wasn't until the government got into the home financing business that most people started to have mortgages, so interest deduction was not relevant until then (but became a major selling point as prices started to go up due to government financing).

"Would you be willing to live in such a cramped, crowded, space? How is there more space than in 1905? You think they didn't think of vertically building things in 1905?'

They didn't have to because there was so much ... ROOM.

"I am simply telling you what the market is telling you. People have been willing to accept subpar quality in some things in exchange for lower prices (see, food). But housing does not appear to be one of those things. Or at least, to a lesser extent."

Higher housing prices is partly due to demand. I will not argue against that. It is also -- mostly in the past 60 years -- due to government meddling.

"And, you cannot simply eliminate the comforts we have today, as if they arise independently from society."

I'm not eliminating the comforts from technological innovation. I am simply pointing out that there is a lot of misinfo and disinfo about the standard of living of life a hundred years ago. Most of this is due to ignorance, but some of it is due to dishonesty or attempting to re-write history.

"Wrong. That is like saying

"Wrong. That is like saying 2% is 100% more than 1%. No, it's an increase of one percentile."

Actually, it is both. For example, federal income tax takes about 13% of the income of working Americans. Herman Cain wanted to make it 9%. You can say "that is only 4%". But in reality, it is a 31% reduction.

"Absolutely wrong. Home financing existed but was very limited (large down payments and short payback terms). The big increase in prices began when financing loosened up by allowing smaller down payments and longer repayment terms, and that was from the government's FHA program. Today, the government controls more than 90% of the home mortgage industry via FHA, FNMA, FHMC, and VA."

Interesting and true. However, the mortage industries are the ones that ultimately lent th emoney out.

Plus, as I frequently say, for 70 years the home mortage industry has been a cash cow (save for a blip in the late 70s/early 80s). They (both government and the market) were right to do what they did then, and wrong to not fix the issue in the late 90s/2000s.

FYI, before the crash, only 2% of mortages were finances with FHA morgates. Following the crash, conventional lending dried up and the FHA stepped in to alleviate the crunch of credit. With no subrprime market, borrowers ended up borrowing from the FHA, so that now 1/3 of all mortgages are backed by the FHA. This will cause problems in the future; however, not in the past.

Fannie and Freddie, along with the FHA and the Veterans administration, do that now, as credit has dried up and the US and the federal reserve bought all those securities. In 2006, Fanie, Freddie, the FHA, and Veteran administration backed 29.8% of all mortgages (and even then, they did not FULLY back the mortgages. Even today, they are not fully backed). Yes, it is a problem going forwards but was not a source historically.

"You should see a pattern here -- when the government got involved in financing homeownership, real estate prices skyrocketed; when it got involved in financing higher education, college prices skyrocketed; when it got involved in health care, health care prices skyrocketed.)"

Again, I see it as demand. The number of elite colleges is mostly unchanced in the last 100 years, yet demand has absolutely skyrocketed year to year. The fact is, from an economic point of view, getting a college degree has been an easy decision until 2006. Of course prices were going to rise to equalize the price/benefit analysis.

Again, whatever government's involvement in education loans might have been, loan payment rate until 2003 was 98%(making payments on time within 6 months of graduating). So the private loan market would have flooded to it, with that high of a repayment rate. Now it is less than 70%.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

Don't get me started on Herman Cain ...

... lol.

"Interesting and true. However, the mortage industries are the ones that ultimately lent th emoney out."

When it comes to FHA, the federal government insures the loan. In the case of VA, they guarantee it. In the case of FNMA/FHMC, they backstop it but pretend they don't (but when push came to shove in the past few years, we saw that they did). Without federal government backing, loans would be based on financial reasons and not political ones. While the banks lend the money, the fact remains that once the feds got involved in insuring/guaranteeing/backing home loans, real estate prices skyrocketed.

"Plus, as I frequently say, for 70 years the home mortage industry has been a cash cow (save for a blip in the late 70s/early 80s). They (both government and the market) were right to do what they did then, and wrong to not fix the issue in the late 90s/2000s."

I'm not against mortgage financing. I made my living in that industry once upon a time. It is the government's involvement that is the problem, not the industry itself. Late 90s/2000s was due to Dodd and Frank DEMANDING that loans be made which made no financial sense.

"FYI, before the crash, only 2% of mortages were finances with FHA morgates. Following the crash, conventional lending dried up and the FHA stepped in to alleviate the crunch of credit. With no subrprime market, borrowers ended up borrowing from the FHA, so that now 1/3 of all mortgages are backed by the FHA. This will cause problems in the future; however, not in the past."

I was in the industry. FHA was a small part of the total because the government's insurance cost was higher than Fannie/Freddie. But the government had an implied guarantee on Fannie/Freddie, which made them cheaper than non-government loans (jumbo and some subprime). The reason Fannie/Freddie loans dried up is because those two quasi-government companies were BANKRUPT due to the FRAUD and government mandates on what they MUST lend. Frank Raines bankrupted Freddie Mac and walked away with $140 million and no criminal charges. They didn't even report financial statements for TWO YEARS because they had NO IDEA what their numbers were. They should have both been delisted from the NYSE but were given special exemptions.

So, when one government program (Fannie/Freddie) do not make loans but another government program (FHA) does, it is just the same beast running the mortgage industry with a slight change in rules. The government f**cked it up and nobody went to jail.

Don't tell me about the mortgage industry. I know what the hell happened. I was there in the run-up and got the hell out before the crazy sh*t hit the fan.

"Even today, they are not fully backed). Yes, it is a problem going forwards but was not a source historically."

Yeah, they are. They are backed as much as politicians will back them because that's how a corrupt government system works. Wanna talk about tranches and collateralized debt obligations and mortgaged-backed securities and Warren Buffett's role in the blow up? Naw. Too boring, but it is 99% government that caused this, along with the banks that are politically connected (Goldman, JPM, BofA, etc.). Most mortgage bankers and brokers had no role other than writing loans according to the government-created guidelines. (Guidelines that were insane.)

"Again, I see it as demand. The number of elite colleges is mostly unchanced in the last 100 years, yet demand has absolutely skyrocketed year to year. The fact is, from an economic point of view, getting a college degree has been an easy decision until 2006. Of course prices were going to rise to equalize the price/benefit analysis."

If you cannot see that demand is artificially inflated when government steps in to subsidize real estate or education or health care, then you are blind, mi amigo. Wake up.

"Again, whatever government's involvement in education loans might have been, loan payment rate until 2003 was 98%(making payments on time within 6 months of graduating). So the private loan market would have flooded to it, with that high of a repayment rate. Now it is less than 70%"

It is highly questionable whether a free market would issue college loans. What is the collateral? Very risky. More likely, without government meddling, universities would look a lot different and be far more effective and responsive to the customer -- and cheaper.

I don't have time to look up historical college costs vs. median income, but I bet you will find the same phenomenon: that prices skyrocketed as government became more involved in subsidizing it.

Gotta go.

Ciao.

"... lol." Whatever can be

"... lol."

Whatever can be said about Cain, he had an interesting tax plan.

"When it comes to FHA, the federal government insures the loan. In the case of VA, they guarantee it."

I know that the VA only guarntee sa certain amount.

"Without federal government backing, loans would be based on financial reasons and not political ones."

Again, for the vast majority of the history of lending, the government did not have to step in to insurse defaulted mortgages because people were paying them off. That is a strong financial reason to engage in them.

"While the banks lend the money, the fact remains that once the feds got involved in insuring/guaranteeing/backing home loans, real estate prices skyrocketed."

Arguably, the government was involved in the 1800s and early 1900s. By telling banks they cannot fraction money, they kept hte money supply low.

In any case, correlation does not equal causation. I can also say that as the federal government has become bigger, prosperity in America has absolutely skyrocketed. But correlation does not equate to causation.

"I'm not against mortgage financing. I made my living in that industry once upon a time. It is the government's involvement that is the problem, not the industry itself. Late 90s/2000s was due to Dodd and Frank DEMANDING that loans be made which made no financial sense."

Again, the banks made BANK on these loans. Was the government twisting their arm so they would make millions.

"I was in the industry. FHA was a small part of the total because the government's insurance cost was higher than Fannie/Freddie. But the government had an implied guarantee on Fannie/Freddie, which made them cheaper than non-government loans (jumbo and some
subprime)."

Doesn't change that 70% of loans didn't involve a government backing or guarantee.

Your notes on your experience in the mortage industry are very interesting.

"If you cannot see that demand is artificially inflated when government steps in to subsidize real estate or education or health care, then you are blind, mi amigo."

Health care is inflated, because government creates demand where there is none.

Again, with education, the government simply got involved so that it could offer a lower interest rate. The banks, of course, wanted a higher rate. And still about a third of loans are done privately.

So, two things. One, the government provided a discount window. For how many people, was that discount window the reason they could afford a college loan? I would bet very few.

College prices have gone up, due to the simple fact that until the current economic crises, a 100,000 loan would result in earning over 1 million in extra income over your lifetime. That multiplier used to be much higher and is simply regressing (perhaps still) to the economic balance point.

Secondly, loans were historically paid back with a ridiculously high percentage. So if government was really giving out loans where banks weren't, government was right to do so. Because those loans were being paid back; the market was making a mistake in not giving them those loans.

"Again, whatever government's involvement in education loans might have been, loan payment rate until 2003 was 98%(making payments on time within 6 months of graduating). So the private loan market would have flooded to it, with that high of a repayment rate. Now it is less than 70%"

"It is highly questionable whether a free market would issue college loans. What is the collateral? Very risky. More likely, without government meddling, universities would look a lot different and be far more effective and responsive to the customer -- and cheaper. "

There is no collateral. But like I said, someone with a college degree makes a lot of money. They use that money to pay back loans. That is why banks flocked to school loans. It was seen as a secure.

In Japan, for example, when the government stopped issuing debt, the market was looking for a low-risk asset to invest in. Student loans became a huge part of that.

"I don't have time to look up historical college costs vs. median income, but I bet you will find the same phenomenon: that prices skyrocketed as government became more involved in subsidizing it."

Let me give you a reverse phenomenon. The government also finances and subsidized IT projects. But the cost of IT products has come down substantially, especially in comparison to the improved quality(ability) of IT products.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

Excellent topic ...

... considering we are bombarded with lies about life a century or more ago.

And let's not forget that in 1905 --

- There was no health care crisis: Medical care was so cheap that "sickness insurance" came about as a way to replace lost wages, not to pay for health care expenses (they were cheaper than the lost wages).

http://www.aaos.org/news/aaosnow/apr11/advocacy6.asp

- There was no "War on Illiteracy:" Literacy rates were higher as a percentage of population (near 100% except for immigrants and blacks), and the level of reading was multitudes higher than today.

http://www.ddooggss.net/8Fmedia/a/HomeLiteracy_USHistory.pdf

- There were few wars of intervention: Americas did not cower in fear over make-believe foreign enemies.

- There were no income taxes or employment taxes, even though Americans enjoyed among the highest standard of living in the world.

- There was no Federal Reserve.

- The federal government was so small that nobody noticed.

And unfortunately, all these

And unfortunately, all these things we are now saddled with, which we weren't in 1905, were given to us by war-time Presidents. More unfortunate, these Presidents are taught to our children as the greatest Presidents.

Bump for later.

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Free includes debt-free!