The government just loves other people’s money

Many years ago, I learned the most important principle for making money in real estate. Real estate investor Donald Trump has used the same principle (along with good skills) to become a billionaire.

That principle is known as OPM — Other People’s Money.

We see today that our country is prospering using other people’s money. Low interest rates encourage borrowing for stock purchases, driving up the stock market. We are borrowing for home and auto purchases, borrowing for student loans and borrowing for all things government.

With the magic of OPM, the real estate buyer controls much more property than without, and as long as easy money is available, the property price will generally increase with inflation. But as we saw when very easy money stopped flowing in 2008, housing prices collapsed.

So all of our current prosperity depends on the availability of easy money. The government — and perhaps the nation’s most enthusiastic advocate of easy money, Mr. Trump — are all working to keep it flowing.

I have no idea how this will end. But typically when a government can’t collect enough money to pay its bills, it borrows. And when that fails, it simply prints the money it needs. That solves the problem by lowering the value of its currency and effectively taxing all money users through decreased buying power.

With Republicans unwilling to control spending, Democrats angling to take the country further into socialism and the Federal Reserve’s fear of raising interest rates, it does not seem promising.