Why Houses Are Expensive and iPhones Are Cheap

Inflation Isn't Just Prices Rising—It's Prices Not Falling

When people talk about inflation, they think: "Prices go up."

That's only half the picture. Inflation also means prices don't fall when they should.

Under capitalism, productivity increases and technology improves. This should make prices fall while quality rises. But inflation prevents this natural price deflation.

The iPhone: Capitalism Working Correctly

In 2007, the first iPhone cost $499 for 4GB of storage.

In 2025, an iPhone costs ~$800 for 128GB of storage, plus 1000x faster processor, professional camera, OLED display, face recognition, and 5G.

You're paying 1.6x more for something that's 100x better. In real terms, dramatically cheaper.

Why? Because iPhones are consumption goods, not stores of value:

Result: Better and cheaper over time.

The Housing Anomaly

In 1920, a Sears mail-order home cost $1,500-$2,000.

In 2025, a basic starter home costs $150,000-$250,000. 100x increase.

Since 1920, construction productivity has exploded:

We can build houses faster, better, and with less labor than in 1920.

So why are houses 100x more expensive instead of 10x better for 1/10th the price?

Because houses stopped being consumption goods and became stores of value.

What Should Have Happened

Under sound money (no inflation), productivity gains would have delivered:

1920: $2,000 for basic house

2025 (sound money):

Like iPhones: way better product for the same or lower nominal price.

2025 (actual fiat reality):

The productivity gains are real—but they're absorbed by the monetary premium on land, not passed to consumers.

Why Land Became "Special" (It's Not Inherent)

The Chain:

  1. Fiat money destroys savings → Holding cash loses purchasing power annually (especially post-1971)

  2. People need to store wealth → Can't use currency, must use assets:

    • Stocks (volatile, requires expertise)
    • Gold (hard to store, government can confiscate)
    • Bonds (denominated in inflating currency)
    • Land/Real Estate (fixed supply, tangible, necessary)

  3. Land becomes default wealth storage → People buy houses not primarily to live in them, but as the least-bad option for preserving wealth

  4. Self-fulfilling cycle:

    • Land prices rise (wealth preservation demand)
    • Rising prices "prove" land is a good investment
    • More people buy to preserve wealth
    • Prices rise further
    • Repeat

  5. Productivity gains captured by land premium:

    • Builder: "I can build this for $50k instead of $100k!"
    • Market: "Great, but the land underneath is now $200k instead of $100k"

This is monetary, not real scarcity.

The Substitution Test: Land Isn't Inherently Special

If any fixed-supply necessary good existed under fiat money, it would be expensive.

Imagine Picasso paintings were necessary for shelter:

Not because they're good shelters (they're terrible), but because they'd serve as stores of value.

People would say: "Picassos are special! They're not making any more!"

This is exactly what's happening with land. The "specialness" is imposed by broken money, not inherent to land.

The Common Objections

"Location, location, location!"

"They're not making more land!"

"Land has productive capacity (minerals, farming, etc.)!"

Measuring in Labor Hours, Not Inflated Dollars

The common mistake is comparing nominal dollars adjusted for "inflation." This accepts the frame that inflation is natural.

The right comparison:

You're working MORE hours for housing in 2025 than 1920, despite construction being 10x more productive.

Where did the gains go? Into the monetary premium on land.

The Cycle

  1. Government prints money → Currency loses value
  2. People need to save → Can't use currency, must use assets
  3. Land is fixed + necessary → Becomes preferred savings vehicle
  4. Artificial demand → Prices rise beyond utility value
  5. Rising prices → "Land is a great investment!"
  6. More buyers → Prices rise further
  7. Productivity gains → Absorbed by land prices, not passed to consumers
  8. Housing unaffordable → People blame capitalism, landlords, foreigners
  9. Government intervenes → Rent control, subsidies, public housing (all fail)
  10. Repeat

Root cause is #1 (money printing), but everyone focuses on #8 (symptoms).

Why Housing Is Uniquely Distorted

Consumption goods (iPhones): Monetary inflation balanced by productivity gains → roughly stable prices

Store-of-value goods (land, stocks, art): Monetary inflation + artificial demand → skyrocketing prices

Housing suffers the worst distortion because it's both:

Inelastic demand (shelter) + artificial demand (wealth preservation) + fixed supply (land) = prices to the moon.

What Bitcoin Changes

Bitcoin provides what fiat destroyed: reliable store of value.

For the first time since 1971, people can save in an asset that isn't inflated away, doesn't require maintenance, isn't confiscatable, and has no counterparty risk.

As people move wealth from real estate to Bitcoin:

  1. Demand for land as store-of-value decreases → Monetary premium fades
  2. Land returns to utility pricing → Priced for shelter value, not wealth storage
  3. Productivity gains flow to consumers → Houses get better AND cheaper
  4. Housing becomes affordable → Priced like iPhones, not gold

In a Bitcoin-denominated world, houses cost 0.5-2 BTC for a starter home, and that BTC-price falls over time as construction improves.

The $100M Question: Bitcoin vs Real Estate for Wealth Storage

A common objection: "But real estate is safer for large wealth! It's protected by the state, accepted by society, harder to steal than Bitcoin (gun to your head scenario)."

Let's examine this claim.

The "State Protection" Myth

Claim: Land is protected by the state monopoly, making it harder to steal than Bitcoin.

Reality: The state doesn't protect your land—it permits you to own it. And that permission can be revoked:

The state "protects" your land the same way a mafia boss "protects" your shop. You pay for the privilege, and they can revoke it anytime.

Bitcoin self-custody means the state can't seize without your cooperation. 12-word seed phrase in your head = unseizable. No permission required. No annual tribute.

The "Societal Acceptance" Myth

Claim: Society recognizes and safeguards land ownership more than Bitcoin, making it more secure.

Reality: Society "recognizes" what people value. And the data shows Bitcoin is being recognized fast.

Since August 10, 2020 (when MicroStrategy adopted Bitcoin):

Bitcoin is outperforming real estate by 10x. Not close. Not debatable. Measurable fact.

As Bitcoin continues outperforming, more people—and eventually institutions and states—will "recognize and safeguard" it. Societal acceptance follows performance, not the other way around.

The "$5 Wrench Attack" Misconception

Claim: Someone with a gun can force you to transfer Bitcoin, but they can't force you to transfer land.

Problems with this:

  1. Land is easier to track and target

    • Public records show exactly who owns what land
    • Bitcoin holdings are pseudonymous—harder to know who has what
    • If you're wealthy in land, everyone knows. If you're wealthy in Bitcoin, you can stay private.

  2. Land can absolutely be stolen via coercion

    • Force someone to sign deed transfer (happens all the time in corrupt countries)
    • Kidnap family members until property is transferred
    • Bribe government officials to "legally" seize via eminent domain or bureaucratic maneuvers

  3. Bitcoin has superior security options

    • Multisig: Requires multiple keys from different locations/people to spend
    • Timelocks: Funds can't move for X period even if key is compromised
    • Geographic distribution: Keys in different countries, different custodians
    • Dead man's switch: Inheritance protocols that activate if you disappear
    • Plausible deniability: Decoy wallets with small amounts; real wealth hidden

    Try doing any of that with real estate.

  4. The wealthy in Bitcoin will be objectively richer and able to afford better security

    • Bitcoin appreciates, land depreciates (once monetary premium fades)
    • Bitcoin holders compound wealth faster → can afford private security, geographic arbitrage, legal teams
    • Real estate holders stay local, visible, vulnerable to local government/criminals

The Performance Reality

If you have $100M to preserve:

Option A: Real Estate

After 10 years at 6%: $100M → ~$179M

Option B: Bitcoin

After 10 years at 56%: $100M → ~$13.8 billion

Even if Bitcoin returns moderate to 30% annualized (half the current rate): $100M → ~$1.4 billion in 10 years.

Which would you rather have?

The Transition Period

"But Bitcoin is volatile! Real estate is stable!"

Volatility = price discovery of a new asset class going from zero to global reserve asset.

"Stability" in real estate = slow bleed via inflation, taxes, maintenance, opportunity cost.

A 50% Bitcoin drawdown that recovers to new highs in 2 years still outperforms "stable" real estate that grinds sideways at 6%.

The Long-Term Trajectory

As Bitcoin matures and adoption increases:

Meanwhile, real estate:

The $100M choice isn't close. Bitcoin wins on performance, portability, seizure resistance, and long-term trajectory.

The only reason to choose real estate is if you don't understand Bitcoin or you're locked into a legacy mindset that "land is safe because it's always been safe."

But "always been safe" just means "was the best option when we had broken money." Now we have sound money. The game changed.

The Broader Principle

Inflation is prevention of natural price deflation.

Throughout the 1800s-early 1900s, prices generally fell as productivity increased. A day's wages bought more every year.

Post-1971, this stopped. Prices rise even as productivity increases because new money floods the economy.

Every industry should follow the iPhone path under capitalism:

This only fails when monetary policy interferes.

Conclusion

Land isn't inherently special. It became special because fiat money is broken.

Remove that function (via Bitcoin), and land returns to utility pricing:

The 1920 Sears catalog wasn't a scam—it was capitalism working. Houses were commodities, like furniture.

The scam is convincing people it's normal for housing to consume 30% of income and require 30-year debt.

That's not capitalism. That's monetary distortion.

Bitcoin fixes this.

Key Insights

  1. Inflation = prices not falling when they should
  2. iPhones get better and cheaper (consumption goods under capitalism)
  3. Houses get better but far more expensive (forced into store-of-value role by fiat)
  4. Productivity gains are absorbed by monetary premium, not passed to consumers
  5. Land isn't inherently special—any fixed-supply necessary good would be expensive under fiat
  6. Self-fulfilling cycle: buy land to save → prices rise → buy more → repeat
  7. Measure in labor hours, not inflated dollars: You work MORE hours for housing now despite 10x productivity
  8. Bitcoin outperforms real estate by 10x (+56% vs +6% annualized since 2020)
  9. State "protection" of land is permission, not ownership—can be revoked via taxes, seizure, regulation
  10. Bitcoin has superior security (multisig, timelocks, geographic distribution, pseudonymity)
  11. Societal acceptance follows performance—Bitcoin's dominance ensures growing recognition
  12. Bitcoin breaks the cycle by providing superior store of value
  13. Future: Houses priced in BTC, falling in real terms, following iPhone trajectory

When Bitcoin succeeds: The question won't be "can you afford a house?" It'll be "which of these amazing cheap houses do you want?"

Just like you don't ask "can I afford a computer?" You ask "which features do I want?"

That's sound money. That's capitalism without monetary interference.

The Sears catalog was a glimpse of what's possible when money works.