To the extent that home prices begin to rise, consumers will feel wealthier, they’ll feel more — more disposed to spend. If house prices are rising, people may be more willing to buy homes because they think that they’ll, you know, make a better return on that purchase. So house prices is one vehicle.
[I]f people feel that their financial situation is better because their 401(k) looks better or for whatever reason — their house is worth more — they’re more willing to go out and spend, and that’s going to provide the demand that firms need in order to be willing to hire and to invest.
It’s only been 4 years since we’ve seen a crash that resulted from a government created bubble in housing and stocks, with people buying beyond their means because they “felt” wealthy, with speculative purchases due to rising prices, with an economy that continues to suffer from all those things and the measures taken to “fix” things, and this guy goes on the record saying that more of precisely that is what we need at this point. Amazing.
You can only believe childish stuff like that if you have no concept at all in mind of what a structure of production is and how savings affect the purchase and production of capital versus consumption goods.
This is why we have business cycle after business cycle and so long as people don’t learn it we are bound to repeat the mistakes from the past.