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Comment by UncleOxidant | Hacker News Reader

> working to unclog ports, fix supply chains and shore up domestic manufacturing of silicon

Much of this is outside of the purview of the US president. These are areas where the private sector has to take the lead. AFAICT there have been efforts to increase domestic manufacturing of semiconductors - Intel is taking a big lead here, but it's going to take at least a couple of years (probably closer to 3 or 4) to get these new fabs online. There's not much a US president can do about that. And much of what he could/can do is limited by congress passing laws.

> The Fed's contribution is small.

It's not. ZIRP has had a huge impact on this inflation and fueled lots of market speculation both in housing and the stock market (not to mention crypto). With interest rates closer to their historical mean this speculation wouldn't have happened.

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Again your speculation about low interest rates is unfounded. Housing prices are driven by zoning as evidenced by the Japan housing CPI being dead flat with similar interest rate policies. Housing prices across the US on an inflation adjusted $/sqft basis are the same as they were in the 70s. Outside metros the average new house is twice as big; and inside councils refuse to allow supply to meet demand - these are both zoning issues.

There aren’t really “historical average” interest rates, they’ve been going down continuously for like 40 years.

Crypto is the same kind of speculation that drew folks to beanie babies. The entire crypto world market cap is like 2/3 of apple, it’s really not a big thing.

Historically the mean rate on a 30 year mortgage is right around 7%. We've been under that for a good 20 years now and we've been way under that for a good dozen years now.

> they’ve been going down continuously for like 40 years.

Cycles. They go down... they go up.

I don't disagree about zoning playing a part, but again, this is something the US President has little control over. Yes, he should probably be using the bully pulpit to support building more affordable housing, but it's not something that's going to result in a quick reduction of inflation.

> Japan housing CPI being dead flat with similar interest rate policies

Japan has an aging, declining population with essentially no immigration. Of course their housing prices have been essentially flat, they're experiencing a decline in household formation.

> Cycles. They go down... they go up.

They do but the cardinal directionality has been down and to the right.

> Japan has an aging, declining population with essentially no immigration. Of course their housing prices have been essentially flat, they're experiencing a decline in household formation.

Totally! What you're describing there is the equilibrium of supply and demand. In their case, demand went down. In our case, demand is going up and we're refusing to add supply. It's the same thing. Or at least, two sides of the same coin. We're both arguing that housing prices are fundamentally - primarily - driven by supply and demand of housing, not supply of money.

> I don't disagree about zoning playing a part, but again, this is something the US President has little control over. Yes, he should probably be using the bully pulpit to support building more affordable housing, but it's not something that's going to result in a quick reduction of inflation.

This is where we disagree! We should federalize zoning rules yesterday. The federal government has the right to do this, for instance Chicago residents ability to install satellite dishes is already governed by federal law. [1] Time to stop obstructionist city councils from the top and maximize the freedom of individuals to build housing as they see fit.

[1] https://www.chicagotribune.com/news/ct-xpm-2005-03-06-050306...

> They do but the cardinal directionality has been down and to the right.

You expected that to last forever?

> driven by supply and demand of housing, not supply of money.

Yes, it's driven by supply and demand, but easy money means more demand than there would be with higher interest rates and tighter monetary policy.

> We should federalize zoning rules yesterday. The federal government has the right to do this, for instance Chicago residents ability to install satellite dishes

I suspect this Chicago instance has more to do with FCC than anything else. Federalizing zoning would likely be an uphill battle that would go to the SCOTUS and I'm going to guess with the current composition they won't look favorably on that.

Ok but more demand for housing plus more supply means an amazing economic growth opportunity right? Nerfing supply means keeping ourselves from it. This is why low interest rates are good - the stimulate development!

And yes I see little appetite for federalizing zoning however it’s both an option with precedent and would actually help unlikely raising interest rates :)

High inflation caused in large part by many years of increasing deficit spending does not make me think 'federalize zoning'. Land and building is local. People can be involved in local politics where they have some influence. One size does not fit all.

Removing house finance interest tax deduction would help reduce speculation and reduce prices.

Im sure it doesn't make you think that - but the deficit spending is a red herring, and the local zoning causing housing to go up exponentially is the real issue here. One of many. Deficit spending is an investment, you're looking at the liabilities without looking at the assets purchased. That's half the puzzle.

$2.3T flushed in Afghanistan was not a productive investment. Government spending is often malinvestment.

https://www.brown.edu/news/2021-09-01/costsofwar

'... 20 years of post-9/11 wars have cost the U.S. an estimated $8 trillion and have killed more than 900,000 people. '

Western USA has large land tracts owned by federal forest service and BLM. Maybe you could advocate for feds changing their zoning to allow house building?

Not all investment is good, but finding a few bad investments doesn't make all investments bad, obviously.

I already advocate for zoning reform at all levels including federalizing the zoning rules to preclude obstinate city councils from banning the desperately needed development within towns.

Large tracts of forest are kind of useless if your job is in a city and the city council won't let you build a house to live near it lol. "If you want houses so bad why don't you build them in a forest well away from anything" is among the worst arguments I've ever heard.

> Housing prices are driven by zoning

All the tax cuts that give real estate advantages over other investments have arguably more to do with it. People don't leverage 5x their net worth into a single asset in a single location that produces nothing but for housing that's the norm.

This is such a misconception. Air is similarly valueless ..

Real estate produces something very valuable, and if you can't understand that try living homeless for a few months .. its the only way without a house you will get to be near amenities ¯\_(ツ)_/¯

In financial terms it produces rent or saving of paying rent.

Nothing is produced by buying and selling land. This is different from investment in capital which is created and destroyed.

Housing is a productive investment because it fulfills the need of all humans to have a place to live.

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