I'm sure we are saying essentially the same thing.

Obviously if you take a $350K mortgage on a $100K income it is subject to the premise that the outgoings to pay for the mortgage can be made within both your current expenditure from the $100K and should include a prudent and reasonable assumption of likely future commitments.

I use the ratio because that is the traditional one in house prices/ earnings (3.5/1) and that is what my parents did.

My point is that many people, and businesses, in the last few years have with little or no justification made the assumption that income - whether through wage/profit increases or property values - WILL always rise and have indeed made there lifestyle choices on what is now clearly seen as a very bad idea.

The really unfortunate reality of the present day is that as property continues to decline in value and jobs become harder to get and to hold even the prudent are being forced into situations where they are in danger of "getting thrown out on..(their).. behind for not making mortgage".

If you think you can increase your income past all the extra expenses and the long period of drop in your partners net income after childcare then you might have a chance of not getting thrown out on your behind for not making mortgage.

but really if you have done that well at increasing your personal income you should have lifestyle coming your way and not just making bankers & tax collectors rents like dickesnian indentured labour.

And otherwise ticking off on that bad ratio as not necesarily a bad thing is saying that you are living in the keating-henry-fraser-macfarlane Australian national ponzi scheme land of false debt-consumerist growth expectations unrelated to any productivity measure. that means your income is going to go backwards big time when that scheme folds in the same way as Madoff's as it is doing now.

UNLESS each year that passes I add 20% more to my overall debt than I take home in pay (including pay increases)

The only way I as an individual or a Government can ever get out of debt is to earn faster than the debt increases and currently that is not going to happen either at individual or national level

Dickens said it far more succinctly. Annual income £20 annual expenditure £20 and six pence - result misery.

Also, duh: they can't use the gold standard because in capitalism wealth becomes consolidated (funneled up) and pretty soon only a few powerful banksters hold the majority of the money. That's why the government had to print more money and that's why we can't use the gold standard. When wealth becomes consolidated the government has to print more money. If wealth just naturally flowed and was spread around evenly by the oh-so-fair invisible hand, inflation would be non-existent and the government would only need to print money when existing bills became damaged.

Bottom line: this is a society and it is not in any individual's self interest to forsake the greater good.