Residential Real Estate is the Credit Cycle
Sankowski finds the Ed Learner paper and says:
I’ve been thinking a lot about this over last few weeks when I have the chance to think. It seems like we are on a real estate monetary standard. Much like how we can use assets like gold to create a commodity money system, it seems like we operate our current monetary system as a real estate standard.
Banks create money against real estate assets. We use this money in our day-to-day transactions, without much thought about what stands behind this money, but most loans are for residential and commercial real estate.I'm not sure I'd go as far as that, but I do think that the residential real estate market is the primary mechanism through which monetary policy has an effect. When people buy a house, they look at their monthly payments, not the cost of the house or how leveraged they become.