Friday, August 21, 2020

Mutual funds seem more friendly to low income investors than home ownership which requires the high threshold of income to qualify for a mortgage.

I read that 55% of Americans own stock. A lot of people own stock and bonds as part of their retirement plans. On the other hand, most of the total value in the stock market is owned by the wealthiest people.

Home value is most likely the main way that common folks save money, but, like the stock market, home ownership is driving wealth disparity. As home values keep rising, the gap between owners and renters widens.

The gap between long term home owners, who bought at lower prices and more recent home buyers, who are buried under a high mortgage, widens as well.

Ironically, the stock market seems friendlier than home ownership for low income people. One can invest small amounts of money into a mutual fund for stocks. Being a homeowner requires the high threshold of having enough income to qualify for a mortgage.

As asset values, such as homes and stocks, continue to rise, the wealth gap widens.

Low interest rates seem to be adding to this problem. Private enterprise doesn't seem to use the money, from low interest rates, very wisely.

As some folks just sit back and watch their financial assets rise in value (your money working for you), government spending is needed to help people who don't have assets.

I've heard it suggested that government should be able to borrow at zero interest rates. In this way, there would be no interest on government debt. As for paying off the debt, government could just "keep kicking the can down the road," which is what it's doing anyway.

Government spending could create meaningful jobs in infrastructure development. Government seems to work better than the private market in doing the things we need; especially in dealing with the pandemic. Also it seems like government is needed to develop green infrastructure for addressing the global warming challenge.

Private enterprise can still be used to carry out the actual work. Use the private sector to carry out government contracts. In these tasks, private enterprise often does better than government bureaucracy.

Private enterprise can do the work, but government seems to work better as a consumer than just relying on the private marketplace alone.

Elon Musk's Space X is an example of government / private sector partnership. A private company sending rockets into space, but much of the revenue still comes from NASA; a government agency.

Glad I am in subsidized housing.