Did you hear yesterday’s controversial episode, and you’re having a hard time swallowing the possibility that the government could be involved in a long-term plan – a conspiracy theory, of sorts – to take control of the housing market? Listen in today for more evidence… and to see exactly how the newly manufactured “rent crisis” is just the latest step in the process. I’m Bryan Ellis. This is episode 173.

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Hello, SDI Nation… welcome to the podcast of record for savvy self-directed investors like you!

Wowzha! The response to yesterday’s episode #172 – which you can find at SDIRadio.com/172 – was pretty strong. If you’ve not yet heard it, you should listen in now before continuing. Now today’s episode is substantially more politically oriented than most, so if politics totally turns you off, you’ve got my permission to skip today’s show. BUT, I must warn you… you’ll see how, in just a couple of minutes, it all ties back together very directly into your interests as a self-directed investor.

So I got a whole lot of supportive comments to episode #172, but some opposed as well. My favorite oppositional comments were from two extremes of the intellectual spectrum. On the one side, there’s Dean Germeten, who shared these “pearls of wisdom” with me:

“Of COURSE there's a rental crisis, what with globalism and export of US jobs & factories, renters can't afford the rent being charged by a**-hole real-estate investors like you, who can't resist taking advantage of any crisis. House flipping should be illegal, as well as 2nd party owners, so long as there's one single-family home-owner who wants a place to raise his kids. You're the lowest form of capitalist parasite there is, hope your karma comes back and bites you hard, like Skreli.”

Wow, Mr. Germeten… how’s life in that bubble of ignorance?

And on the other side was my friend Lee in Florida, who also disagreed with me, but who lends some intellectual substantiation to his argument. Lee’s basic premises are two: first, that the Harvard study declaring a rental crisis could easily be made to reflect any particular opinion; and second, that there’s no way that the folks in the U.S. government are smart enough to effect a long-term – as in multi-decade – plan to silently overtake the U.S. housing market. He then added some comments about the Dodd-Frank law about which he’s totally right and I think justify a show of their own.

So I’m going to address the rest of this show to Lee, because I suspect that the more thoughtful among you who disagree with me have a similar rationale. To set the stage, you should all know that I think very, very highly of Lee and his wife Betty. They’re incredibly bright people… the kind of people that I constantly find myself hoping to get to spend more time with. This is not manufactured praise; I really think very highly of them.

So Lee, here’s the thing… I agree with you in a big way: There’s not a lot of competence on display in Washington. The policies I mentioned yesterday – the Community Reinvestment Act, TARP, ObamaCare – are all really good examples of ideas that were implemented and totally screwed up by the government. So your questioning my assertion that what’s happening today is part of a larger plan is entirely reasonable.

But there are 2 flaws in that criticism that I see:

First, your comments appear to assume that the goal of Congress and various Presidents is to implement strategy that is fiscally and practically wise from a long-term perspective. That simply isn’t the case. The model followed by the government is this: One party suggests an incredibly insane idea. The other party resists it, but not strongly so, in order to avoid being too objectionable. A piece of legislation that is 80% of what was originally demanded is implemented, but it’s structurally incomplete and destined for substantial problems in the future. These problems leave room for the government to swoop in in the future, and further expand the reach, power and influence of the government and the cycle repeats itself. It’s happened that way with healthcare. It’s happened that way with gun rights. It happens every year that way with taxes. And it’s happening that way with housing. My point is this: You don’t have to be a long-term strategic genius in order to design a piece of legislation, the purpose of which is to be inadequate in the near future so as to create the opening for more legislation.

My second point is this: Whether the feds in Washington are strategically intelligent is one question. But one thing that can’t be questioned is this: They are patient. There’s a reason that it’s so important to Washington that it have a huge role in determining how children are educated… that’s the starting point. It can take years to mold a mind into having a particular frame of reference – one of dependency rather than independence – but that’s what government is good for. It’s not just children, either… medicare, social security… both of these huge issues are a function of the fact that the people in Washington are very patient… and are willing to let time play out in their favor, even during the times when legislation isn’t going their way.

So where does this leave us as investors? That’s the big question concerning this “rental crisis” issue that Harvard is drumming up.

Is it possible that rents are getting too high? Sure it is! I don’t know that to be true, but it’s entirely possible… that’s the nature of a free economy… sometimes prices are high, sometimes they’re low, most of the time they’re about right.

But regardless of the pricing, it will adjust, and what we have right now is not a crisis. It’s only a crisis if your definition of crisis is that not everybody can afford everything they want, such as with the intellectually embarrassing comment I cited earlier by Dean Germeten. In that case, there’s a crisis, and the only way to handle that crisis is for the feds to step in and take control of the market.

And remember – an increase in government ALWAYS means a decrease in freedom. There are no exceptions. And that’s antithetical to you as a self-directed investor. It’s a part of your very genetic makeup to be able to make your own decisions.

So where does this leave us? Where it leaves us is in a huge mess concerning our rights as real estate investors… for the moment, this is particularly relevant to you landlords.

Presently, we have a program called Section 8. It’s a program that provides housing vouchers to low-income people so that they can rent a home at little or no cost to themselves. Now, absent any other considerations, I like Section 8 as a landlord because it means I get paid on time every time and it means that I have a huge “stick” to wield against tenants who might want to damage my property, as it’s possible to have vouchers stripped from people who do so.

Having said that, it’s my expectation that at least two really bad things are on the horizon for our rights as property owners. One of them is the potential for a sort of national rent control… which will be softened by the expansion of a form of Section 8 that’s available more broadly than just to the lowest income recipients. And the other is increasing “nationalization” – although in a softer form – of real estate ownership. This latter issue is already under way, and I’ll tell you how in tomorrow’s episode of Self-Directed Investor Radio, in which I’ll conclude this line of thought with some rather scary revelations and some thoughts on how you should consider “playing this” as an investor.

We’ve got some GREAT things planned for you in the coming year… including two new SDI shows that you’re going to LOVE! So please, don’t miss a thing… text the word SDIRADIO with no spaces or periods to 33444. Again, that’s text the word SDIRADIO to 33444 to get on our private update list!

My friends… invest wisely today, and live well forever!

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