I've recently been thinking a lot about policy changes that might help with housing affordability, and the same thing keeps happening: every time I think I've come up with something clever, I eventually realize that I've just accidentally made things even better for people that started off with a lot of capital.

It feels like aside from explicit redistribution of wealth (raise minimum wage, tax high income earners more, raise high-end property taxes), you can't change _anything_ without making the rich richer and the poor poorer.

(You can certainly have the input to one feedback loop be the output of another).

Then structural deflationary forces would manifest as UBI increases instead of interest rate decreases.

I think the positive real interest rates would ensure the UBI isn't all captured by rent increases, although it's hard to be certain unless it's tested.

We got at least two world wars out of "deflationary spirals" and every single gold standard that was attempted failed during deflation.

Also, liquidity preference is a systemic redistribution from the bottom 90% to the top 10%.

The people that benefit from inflation are the savers and bankers in the top 10% because they can live off the interest or capital yields which must be higher than interest.

Bankers and savers benefit because governments, people and companies pay debts first before they pay anyone else. If the cantillon effect exists it exists in the boring form of those who own the most get paid the most. The proximity argument is nonsense because there are banks in every city. You can "print" money yourself by getting a mortgage to buy a house and many people do.

This is pop psychology and there is ample counter-evidence for it.

World War 2 was not caused by monetary policy! A hypothesised, partial cause that Hitler certainly exploited was crippling debts. But that wasn't solvable by economists. Do you think the allied powers that defeated Germany in WW1 would have sat back and tolerated Germany inflating away its war debts?

Every single, new building puts downward pressure on the average price. The moment supply outstrips demand, prices goes down, housing market stops being reasonable asset, money outflows causing further collapse of the market and houses are dirt cheap.

At the very least, a supply-solution proponent would need to explain how China's property supply glut didn't bring prices down until the government cracked down on credit.

A lot of equity derives its value from real estate so the obvious escape into stocks won't work in practice.

That said, deflation only ends up happening in specific goods categories like TVs and computers, which are at a particularly sharp point in the technology curve, such that they deflate even faster than average. That's again because the average CPI growth is governed by a feedback loop, where the central bank adjusts interest rates to target 2% inflation, so as, say, food gets cheaper to produce, monetary stimulus is gradually added to the system to combat the falling costs and encourage more consumption. This is done to avoid the kind of deflationary cycle that you're talking about. (Central banks want to avoid deflation so that debts don't become onerous to repay, which can create a depression).

But the result is that while technology is deflationary, it does not create deflation, because that's maintained by a feedback loop; instead it manifests in gradually declining interest rates (and thus increasing valuations and real estate prices, as I mentioned).

That's what it's like to be in a feedback loop. Your computer may act as a heat source for your home but as long as the thermostat is maintaining temperature at a setpoint, the computer won't change that average temperature -- heat it produces will be offset by reduced furnace activity.

(Of course there are also long-term structurally inflationary forces as well. Environmental damage and resource scarcity, like declining fish stocks for example, are structurally inflationary forces. Demographics can go either way. Short term things like wars, debt crises, earthquakes, or pandemics can obviously have a huge impact, and irresponsible monetary policy can throw things right out the window.)

> Central banks want to avoid deflation so that debts don't become onerous to repay, which can create a depression.

Agreed. In other words I didn't realize the 19th century was so bad!

Also, since its hard to imagine technology process with out debt in a market economy, we have have an interesting interaction here.

This is still true today. Interest is at zero, people keep their money in bank accounts of banks who are so heavily overleveraged vs their demand deposits that they are unable to take the risk of lending.

Money is stuck and has to be replenished by more borrowing i.e. QE asset purchases give banks more reserve assets and let them pretend their balance sheet is clean.