In many cases it alters the family's spending habits as they extract equity from their homes.
I agree with Alan Reynolds
I'm a supporter of CATO, but this one issue we don't see eye to eye on. I've even briefly argued the subject with William Niskanen.
Its a Chicago vs. Austrian thing. Only time will tell (of course both camps will simply have different interpretations)
Do you subscribe to the belief that Americans are addicted to debt and don't save? I hope not because it's all myth. Just look at the most recent Fed figures on household net worth - $50 trillion - with only about 20% of that attributable to homeowner equity. The average American household has about 57% equity in their home. Americans' total debts, including mortgages, are dwarfed by their liquid assets. Household net worth is double what it was just 10 years ago.
In 2004, our credit card debt rose by just 4% while we increased our financial assets by $590 billion. What's truly remarkable is that our per capita liquidity exceeds that of Japan - a country known for it's high savings rate.
The Commerce department doesn't count capital gains when they tally the national savings rate. Since 1997, American's have cashed in a total of $3.5 trillion in capital gains which is more than the combined total of the past 20 years.
Isn't it hard to be a doom and gloomer in light of all this good news?
Its a Chicago vs. Austrian thing.
??