There was a very long comment on a recent post.  I felt in needed a long response.  I'm not going to reprint the whole comment here... feel free to follow the links...

Here we go...

a) The fact that real estate is often a leveraged investment has absolutely nothing to do with the discussion... 

b) Maybe you could try actually explaining the leverage effect of the tax credit.  My guess is that you will try to make the case that buying a home creates jobs and increases the tax base.  It certainly may.  However, there are a certain amount of sales that would have taken place whether the credit was available or not...  Sara from Zillow has stats to show that 334,000 sales were "created" by the tax credit.  There will be about 1,860,000 sales that will take place.  The cost of the tax credit will be around $14,860,000,000.  This means that the tax credit actually costs about $44,500 for each "created" sale.  And many of those sales that were "created" by the credit would have happened at some point in the future.  Leverage is working the wrong way for you here...

c) Sorry, I am a FairTaxer and that WOULD eliminate the tax considerations you are talking about.  Besides, you can't depreciate structures for personal use... only business use.  And that depreciation is recaptured if the property is sold for a profit...  If you depreciate the value of improvements on a property, but sell it for more, you have to either re-invest the equity or pay taxes on it... again, for business use. 

d) Actually, while the discussion has little to do with this subject, YOU might want to go back and read about the Great Depression.  FDR's policies actually lengthened the depression according to many historical economists.  They helped some people, but spread the misery over a longer period of time.  And the deficit ISN'T small compared to the GDP, nor is it small compared to the federal budget.  Over 12% for Deficit compared to GDP, and the budget for FY2009 was supposed to be $3.1T with 2.7T in revenue.  We are going to exceed revenue by almost $2T instead of $400B...

And recession is NOT the opposite of inflation.  DEFLATION is the opposite of inflation.  Deflation and recession CAN happen at the same time... or not.  A recession is a SHRINKING of GDP.  Inflation actually hides shrinking because it appears that there is more output (more inflated dollars produced...).  So, since you don't even have the basic concepts down, arguing your point is strained... 

The "value of money" is NOT created by the government, but rather by the international response to monetary policy.  Do you really think that any government would adopt a weak currency policy on purpose for a long period of time?  Actually... yes, but that hasn't been the goal of the US.  Rather, value is lost when we have inflation greater than that of other countries.  Our currency devalues in relation...

And while it is true that you can't split the housing crisis from the rest of the economy, that is because housing is a symptom.  The disease is DEBT.  Jobs are a symptom (and fixing THAT symptom will help housing more than a tax credit...).  But, the problem is that we have created a system where the entire economy was fueled on empty debt... not investment, not saving... just empty debt.  Borrowing to build a factory or open a business is good debt, borrowing to buy dinner is stupid. 

And on Mercantilism...  Perhaps you should read up on it...  In a nutshell, it involves tariffs, protectionism and subsidies.  While YOU might think that is pure capitalism, most of the rest of the world would disagree... 

*** Let me also add that I didn't like the condescending tone of your comment.  It is kind of ironic that you were WRONG on almost every major point you tried to make.  And while I love debate, people that step into MY blog and try to put on their elitist gloves BETTER be ready to duke it out.  Basically, if you are going to try to "school" me, you better be sure... and maybe you should bring your sources. ***