Of course, while house prices were going up, that became a substitute for saving. People would refinance their homes, take the profit and spend that, hoping that prices would go up again. And then they would do the same thing and spend that. But I do think this home-ownership craze does tie in with a newfound fashion for spending rather than saving. I'm old enough to remember in the 1930s and the 1940s when thrift, frugality was considered an important virtue. In those days we all knew Benjamin Franklin's aphorism, "A penny saved is a penny earned." Today, the official doctrine seems to be that a penny spent is a penny earned.I like how well he articulates the proper trade off between renting and owning your home. Owning a home is tied to the American dream, yet the choice isn't necessarily obvious.
Wednesday, April 9, 2014
Edmund Phelps. My favorite quote: