Sciencism

I purchased a car (a Toyota Prius) yesterday. I paid the seller AUD 15,500 for it. It took a big chunk out of my savings. As I was driving it around town, I thought about my purchase. Science talked to me, and told me these things which I would like to share with you.

Often, we hear about the rich getting richer and the poor getting poorer. What does this mean?

The problem is primarily caused by two things:

1. They "own" things that actually belong to the community
2. They lend money for interest

I want to talk about the second item. Interest is earned by someone, when they lend money to others. The borrower pays for the use of the money. This payment made in exchange for the use of the money is known as interest. Why do people need money? That's a stupid question... who doesn't need money? Everything in this world revolves around money doesn't it? Maybe it's not such a stupid question though.

See, if you think about it, these days people need money to buy things, but of these things, most are things we don't really need. Such as a big house. Do two people with a few kids really need a 6 bedroom house? Not really. But we see advertisements in the media and we see our friends and rich people having these huge houses, and we want to be like them. And so, we borrow money so that we can buy this big house that we don't really need. And this locks us into paying interest to bankers and other financial institutions for 20-30 years.

What if we actually constrained ourselves to spending money that we actually had, instead of spending money that we *might* have in the future? Demand for housing would drop through the floor and would take the price of houses with it. We might then be able to save enough money to buy a house within a few years with cash. What if, upon getting married, a couple were to live with their parents for a time? They could benefit from the wisdom of their elders, plus they wouldn't really need a house of their own right away.

When I bought my Prius, i fleetingly considered taking out a loan. The problem with loans however, is that you're spending money that belongs to someone else. For this "privilege" you're going to be indebted to them for a quite a long time. To top it off, you don't actually own the thing that you're buying until you've paid off the loan. Technically it belongs to the person who lent you the money. For me though, the decision was pretty much cut and dried. I'm not yet a permanent resident of Australia, and so taking out loans would be impossible I reckon. Which is just as well, because I'm not really keen on spending money i don't actually have right now.

While driving in my newly acquired Prius, I saw the neat rows of houses, and I thought about my future. How was I going to buy a house? Would I have to take out a loan? A small house here costs around  AUD 200,000. It would take a really long time for me to save that much money.

The problem with the price of houses is this: when people take loans, their "spending power" increases. This drives up the price of houses. So now, those who prefer to save money to buy or build a house are at a disadvantage because it's near impossible for them to afford to buy a house because of the artificially inflated price of houses. This forces them to take loans, which drives up the price of houses further. This becomes a vicious circle. A circle which needs to be broken somewhere.