by Brandon Smith, Alt Market:
America is in the midst of a stagflationary crisis; there’s no way around it. It doesn’t matter how much oil Joe Biden dumps on the market from the Strategic Reserves. It doesn’t matter how many jobs he is able to temporarily buy with the $8 trillion-plus covid stimulus package. It doesn’t matter how many times the mainstream media claims we are “in a recovery.” The fact is, the majority of Americans are being priced out of integral markets and the longer this goes on the deeper the hole is dug and the harder it will be for people to climb out.
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That’s how most economic disasters work; the populace is not dropped into the pit automatically, the pit grows up around them over time. We have seen worse conditions in the US in the past, including the Great Depression and the stagflation crisis of the 1970s. The people who think conditions are bad now haven’t seen anything yet (interest rates eventually climbed to 20% in the early 1980s, crushing borrowers). That said, there is a growing potential for today’s crisis to BECOME the biggest financial crisis in our nation’s history given a little more time.
Part of this ongoing problem is the heavy inflation in housing prices, and make no mistake, this IS one of the biggest threats facing middle-class America right now, which in turn affects people under the poverty line. Rental prices on the average American home have climbed to $2047 per month – The average in 2019 was $1465. That’s a 30% increase in housing costs in the span of four years.
For apartments, the average cost today is $1372 per month, compared to $1078 per month in 2019. The rent-to-income ratio in the US is now estimated to be 40%; meaning, most Americans are paying up to 40% of their income just for housing. Anything over 30% is considered overburdened.
The average cost of a home was $313,000 in 2019. In 2023 that average rose to $431,000, far outside the annual income of the majority of Americans and pricing out over 67% of the population. As mortgage rates skyrocket and middle-class Americans are pushed out of home ownership, they then have to move into the rental market where the supply steadily declines and prices rise due to demand.
The problem is not just higher prices, this is merely a symptom. There’s also falling availability across the nation.
Rentals in many areas (outside of crime ridden metro neighborhoods) are awash in applications, so much so that a new scam has developed among some property owners requiring fees just to apply. These “screening fees” can climb into the hundreds of dollars for each applicant, and in most cases the applicant never sees that money again, even if they don’t get the rental. This is not to say there are no homes available anywhere; rather, availability is falling at a greater pace and new housing can’t keep up.
There are claims that this trend will soon reverse and that builders are set to flood the US with new properties, but I seriously doubt it given current conditions. There are multiple factors at play keeping housing in stagflationary limbo and one or more of them need to change dramatically.
So what can be done about this? I’ll rephrase the question – What solutions can be pursued that will have quick results rather than taking a decade or more with minimal benefits? The truth is, the solutions are simple, but they require actions that some people would consider “extreme” or contrary to their political aims.
Certain interests would do everything in their power to prevent such solutions from being achieved and that’s the ultimate obstacle. It’s not only that there are numerous instabilities within the economy, the greatest obstacles are the political groups and corporate cabals that will try to stop basic reforms from happening to alleviate the crisis.
These solutions would have to be enforced at the state level, because there’s NO WAY under the current federal regime that such measures would aver be allowed nationally. Step one is the most important and will probably get the most angry opposition…
Step 1: Deport All Non-Citizens In The US
Gen Z activists often argue that they have inherited the most unfair financial conditions in history, including exploding home costs. This is simply not true, of course. The Depression era and the stagflation disaster of the 1970s were far worse than conditions today. Can the current situation become a calamity? Oh yes. But Zennials are already panicking and we haven’t even gotten to the hard part yet.
While younger Americans blame “boomers” for their fate, it should be noted that Gen Z often supports policies which are destroying their own future prospects. For example, a majority of Gen Z defends open border policies and amnesty for illegal immigrants. Yet, it is this trend that is helping to drive up the very housing costs younger Americans complain about. If they want affordable housing, they will have to let go of some of their more childish fantasies about America as a “multicultural melting pot” open to everyone.
No refugees. No Asylum. No three year wait on court proceedings while they live off the system and take up housing space. If they didn’t migrate here through the proper legal channels they should be removed from the country and immediately shipped back to their nation of origin.
If you want to know why rental housing in particular has skyrocketed in the past couple years, it’s not only because of inflation in the money supply. There have been more than 2.8 million illegal migrant encounters at the southern US border in 2023 alone. At least 1.5 million of those migrants have been allowed to enter the US by the Biden Administration under asylum rules, and the rate of illegal crossings is only increasing with each passing year.
There is an estimated 16.8 million illegal immigrants residing in the US as of 2023, though the real numbers could be much higher. To put this in perspective, only 3 million Gen Z Americans have turned 18 since the year 2000 with the possibility of needing housing in the near future. Removing illegal immigrants (who are not supposed to be here in the first place) would greatly ease the housing market and leave ample excess rentals for young Americans. The increased supply would quickly bring down rent prices and perhaps even home purchase prices.
The most common argument against this kind of measure would be the assertion that America “needs” migrants to help with labor shortages. I would point out that labor shortages are a fleeting aspect of the trillions in covid helicopter money dumped into the system in the span of a single year. And, as the effects of this fiat money fizzle, the jobs market will plummet.
America is taking on a population explosion that it cannot compensate for while acting as a steam valve for foreign governments to pawn off their problems. You want to know why housing prices are exploding? In part because of foreigners sapping the supply.
Fixing the problem at the state level would require stepping on the toes of the federal government and enacting immigration enforcement within state borders. Greg Abbot, the governor of Texas, is partially doing this by busing migrants out of Texas to Democrat sanctuary cities. The crisis will not be fully averted until illegal migrants are bused out of the US entirely, but booting them out of red states would help and blue states would probably be forced to follow suit as they suffer under their own foolish sanctuary policies.
Step 2: Stop Foreign Purchases Of US Properties And Land
This is an action that some state governments are already pursuing. More so in the case of preventing the Chinese government and their corporate partners from buying up property, but this should apply to ALL foreign buyers. Roughly 40 million acres of US agricultural land is owned by foreign companies, and foreign buyers purchased over 84,900 homes in the US just in the past year. High interest rates are slowing these purchases, but not enough.
