While the United States there is a bubble of everything, i.e. housing, healthcare, and education are more expensive than ever before, Europe has been faring a little bit better. Only housing is completely out of reach for the vast majority of non-boomers whereas healthcare and education have not gotten that much more expensive. The sudden and unexpected rise in real-estate prices is a topic that is still discussed in the mainstream, though. I recently came across a mainstream article that looked at housing in Germany. Of course, there was not the slightest attempt to explain why housing got more expensive. It simply happened out of nowhere, for absolutely no reason at all, and it certainly had nothing to do with the zero-interest-rate policy (ZIRP) of the European Central Bank, or the fact that Europe has been flooded with many millions of doctors and engineers who, for whatever odd reason, do not seem to work in the professions they had prepared themselves for the entirety of their lives. Of course, this enormous latent labor force consisting of low-IQ immigrants also needs to find housing, thus increasing demand when housing supply is relatively constant.

I read that real-estate prices in Munich, the most expensive market in Germany, tripled between 2012 and 2022, from around 2.700 euros per square meter to around 9.000 euros per square meter. Let me spoil the surprise: no, salaries did not triple during these ten years. Prices thus not only nominally exploded but in real-terms as well. When I looked at that paragraph, in an article that was placed in a magazine for boomers, I had to pause. Could it be that the bullshit housing boom has been engineered for the benefit of boomers? As I kept thinking about this question, more and more schizo thoughts entered my mind. Let us unfold them!

Most interestingly, Europe, not just Germany, is run by boomers and for the benefit of boomers. Birth rates have been nosediving for decades. The most recent drop, which was definitely not due to the vaxx, which wrecks the ovaries of women, is the biggest on record. I recall reading that in 2023 the decrease was over 6% across the euro zone. There are fewer and fewer non-boomers who are able to finance the pensions of boomers. Boomers, on the other hand, seem to refuse to die. They are also the dominant force in elections. Thus, politicians are incentivized to do what boomers want. Otherwise, they may find themselves out of a job.

In addition to the demographic problem there is the fact that pensions in many European countries, and certainly in Germany, are quite low. Many retirees cannot live off their pension comfortably. Yet, what if there was a way to indirectly put money in the pocket of boomers? I know, I know, I am going out on a limb here, but bear with me for a bit: What if politicians realized that all these boomers sit in their paid-off houses, which are way to big anyway, and were looking for an angle to solve the problem of oh-so-poor boomers who cannot afford their second or third cruise per year so easily anymore? They probably would be happy to move into a smaller apartment, albeit certainly not a small one. If their houses were worth a lot of money, they could sell their houses, by an apartment, and still have hundreds of thousands of euros left over, which will be enough to cover all their living expenses, and then some, until they are dead.

In a recent post, and also elsewhere, I mentioned the Cantillon effect, i.e. the fact that in an inflationary environment the people closest to the source of the money will benefit the most from it. This is exactly what happened during the ZIRP era. Interest rates were lowered in order to boost spending and indebtedness. After all, if money is cheap, it is cheap to load up on debt. As a consequence, everything got more expensive due to inflation, but this is not a problem for boomers. Their often rather basic houses were suddenly not worth around 250.000 euros but 750.000 euros and above. Thus, they could pocket a huge difference and benefit greatly from the Cantillon effect. After buying an apartment, even at a now-inflated price, they had ridiculous amounts of money left over.

I have obviously no proof that interest rates were deliberately manipulated in order to make boomers rich, or even richer. However, this is exactly what has happened. You need to pay boomers triple the money for their house and go into debt up to your eyeballs. In contrast, they benefited from cheap prices half a century ago, and on top they now get to siphon off even more money. Thus, they won both at the start of their adult life and at the end of it. It does not matter whether the housing bubble happened accidentally or due to financial engineering. ZIRP did not happen by accident, though. It is just not completely clear whether the boom in housing prices was accidental or deliberate. In any case, it was a boon to boomers who have been laughing all the way into their grave. But, hey, they are almost dead whereas you still have your entire life ahead of yourself, so we should feel pity for boomers, according to mainstream intellectuals like Jordan Peterson. In reality, they envy you, debt-ridden peon, and would gladly trade places with you so that they could finally learn what it means to struggle.