Via HPC, a reprint of an article from 1902:
Glance for a moment over the financial history of the century just closing, and see what has been the condition of the country.
During 1837 the country was in the midst of a financial panic.
Again during the year 1857—twenty years later—there was another panic. In 1837 a financial crisis struck the eastern states and the great banking house of Jay Cook & Co. was found among the financial wrecks scattered throughout that section of the country.
In 1875 that same panic reached the Pacific Coast, closing the doors of the Bank of California of San Francisco, together with many other banking institutions, including the then popular banking house of Temple and Workman in our own Los Angeles—a bank that failed for over a million dollars and never paid a cent on the dollar to the many unfortunate depositors.
In 1893 the next panic struck the United States after having wrecked so many banking institutions in South America, Australia, and other parts of the world...
Same old, same old - there were similar credit bubbles/busts together with their inevitable flipside, peaks in land prices (i.e. house prices) in 1973, 1989, 2007...*
It strikes me that we could iron out the boom-bust cycle and do the productive economy a lot of good by shifting taxation from incomes and production onto land values, surely it must be worth a try?
* To fill in the gaps, it appears from the article that there was A Bank Panic in 1907; we all remember that there was A Big One in 1929 (unusually, this was based on a share price bubble as much as a land price bubble), the Second World War interrupted things a bit, so there was a short lived house price bubble in about 1949 in the UK (down to genuine shortage of houses) and there was a slightly longer gap between 1949 and 1973 because of reconstruction after Second World War and because the UK government allowed many more homes to be built and we had Domestic Rates and Schedule A taxation (which between them amount to a crude form of LVT).
Sunday, 11 July 2010
Fred Harrison's eighteen-year cycle, historic edition.
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7 comments:
MW, seriously mate, I'd watch these homeownerists.
I got really drunk on Friday night and had what I thought was a jokey rant about HOism in our local, inspired by your post on toads.
The buggers turned on me! My flatmate had to drag me out and send me home, apparently the HOists were planning on beating me up!
SL, it is an uphill struggle, I have had similarly aggressive reactions from otherwise perfectly rational and liberal people.
"Schedule A taxation": attaboy! Bless my Pops.
D: "[Scrapping Schedule A] is good for us, son, but not good for the country."
The thing is MW, what if theit fifedom does come crashing down?
Their rulers will need a scapegoat, we could end up being beaten to death by the HOists in goal cells!
JH, are you alluding to the Freemasons or some such other shadowy organisation that is behind this whole Home-Owner-ist malarkey?
SL, their fiefdom comes crashing down every 18 years, without fail. They don't need to imprison the next generation of mugs in the literal sense, they just hike the tax burden on them and enslave them indirectly into tax or debt servitude.
And the few anti-HOists who stick their heads above the parapet get bribed into acquiescence, disgraced or otherwise shut up. I'm still patiently waiting for my turn.
You mentioned the Crash of 1929, There was a massive land bubble around '23-'26 linked to expansion of credit - especially with dodgy land in Florida becoming part of a major series of national scams.
The land bubble burst, but the banks kept pumping credit. This centered on lending to Germany to ensure it didn't default on bond and reparation payments to England and France. The money paid to England and France was needed to be passed on to US banks and treasury. The money was that used by England and France to buy US armaments during the war. The credit creation ensured the continued profitability of businesses and rising stock markets. International trade had moved from real bills of exchange to financial bills after 1914, a key step in the financialisation of the world economy.
Banks lent heavily to individuals of dubious creditworthiness to buy stocks while land speculation fell out of favour. It's a classic story of serial bubble-blowing coupled with bailing out of imprudent lenders. So while land was a significant part, the corruption of the system of international trade and attempted enforcement of unrepayable debt was key.
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