So in the previous post on this topic, I speculated that part of the reason why kitchen cabinets are so crazy expensive is because refi money has an inflationary effect on prices. Since people are leveraging the value of their houses to remodel their kitchens rather than paying for them through savings or income, they experience a “wealth effect” that leads them to spend more freely. But the market is not dependent upon this simple mechanism because by itself that would leave too much money on the table. In order to extract the maximum amount possible, two more psychological effects must come into play.

It’s often remarked that a house is one of the biggest purchases people make. Households after all are not businesses. But what if homeowners (not speculators) could become small business operations by investing in their houses? Who wouldn’t be willing to spend more on their biggest purchase if they would make money by doing so? You gotta spend money to make money, right? Ka-ching! Price boost for kitchen cabinets and the whole kitchen remodeling industry.

The wealth effect only goes so far in getting people to accept the high price of kitchen cabinets. The redefining of buying new cabinets as an investment decision rather than a consumer purchase is a small example of how the logic of finance and leverage reorients choice. A couple of generations ago, back before the ready embrace of debt, families celebrated the act of making the final mortgage payment and thus owning their own house free and clear of the bank. Now in the day of mortgage-backed securities, people are encouraged to see their most illiquid asset as a source of purchasing power that pays for itself. Only a sentimentalist or a fool could think otherwise.

But our society is still in transition; “financialism” does not yet reign complete. Refi money appeals to our consumerist impulses and remodeling as investment flatters our sense of economic sophistication, but there remains enough of the “a house is a home” traditionalism that one more card must yet be played before all the money is handed over. In some ways, this is the most manipulative because it conjures an insincere nostalgia.

Any lingering resistance to playing one’s appointed role in this unequal transaction is muffled tenderly by the anodyne assurance that “you will only have to do this once.” This blandishment is received like a benediction. The enduring warmth of the familial hearth is invoked and the (over)payment for a consumer good rebranded as an investment is transmuted into a selfless pledge to shared commitment and continued happiness.

Game, set and match.