Why younger people can't buy a house: money became too cheap | Dominic Frisby

The standard solution is: "we need to build more", but this is not a simple supply-and-demand issue. Between 1997 and 2007 the housing stock grew by 10%, but the population only grew by 5%. If house prices were a function of supply and demand, they should have fallen slightly over this period. They didn't. They rose by more than 300%.

The cause of house price rises is the unrestrained supply of something else: money. Mortgage lending over the same period went up by 370%, thinktank Positive Money's research shows. It was newly created debt that pushed up prices in a decade of extraordinarily loose lending.. When you have runaway inflation such as this, the Bank of England has a responsibility to quash it, usually by putting up interest rates. But -- and here is the great sleight of hand -- the Bank has seen fit not to include house prices in its measures of inflation... The fraud persists today. The Bank of England says inflation is 0.3%. Really? With house prices up by 10% last year?

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2008 gave us the crisis we needed to address the problems inherent in our money system -- how is money created? Who gains and who suffers by this system? -- but our leaders chose not to. Instead interest rates were slashed, so mortgages and other debts became incredibly cheap... We got the great obfuscation that is quantitative easing; £375bn of newly printed money flowed into the financial sector and on into the London property in which it mostly lives. Asset-owners were bailed out and the next generation was made to pay the price...