Re: Real Value is created when assets appreciate
There are two ways to convert an appreciating asset into money: you can sell it, or you can borrow against it. If you sell it the over-valuation problem passes on to the person who bought it; if you borrow against it the over-valuation problem passes on to the banking system. Since often the person who bought the over-valued asset did so with borrowed money, the problem ends up in the banking system.
So the end cost of feeling wealthy because you have over-valued assets is that you feel squeezed by the taxation process required to recapitalise the banking system - unless, of course, your Government decides that it should recapitalise the banks by cutting government services that people actually have difficulty living without, rather than by sticking up taxes.
It is remarkably politically unpopular to forbid buying over-valued assets with borrowed money, even by trivial changes like requiring the valuation of a property for a mortgage to be no more than the minimum amount that a comparable property has sold for over a period going back in time by the term of the mortgage.