Everything is a symbol. Sure money is a symbolic unit for translating value, but if there is no value backing them, people don't value the house the same - or more properly the MARKET doesn't value the house the same.

When Obama prints up a trillion dollars, like he did in January of 2009, the value of the dollar goes in the toilet. Why? It's a dollar, right? It has Washington's face on it and everything! But the market says that dollar is worth less because it's not backed by real wealth. It's backed by a bond which may or may not be viable if a nation's economy goes to seed.

My grandmother told wild tales of prewar depression era Germany and how upon entering the bread lines desperation grew as inflation rose hour by hour and minute by minute. A loaf of bread may cost 20,000 marks when you first got into line, but by the time you got to the counter it was 400,000 marks.

What happened to the value? The market adjusted.

So a government built house is like printed money, it has a fluctuating value like that loaf of bread. The bread and the house don't physically change, nor does the labor that created them, but the market adjusts their value because of supply and demand and due to speculative and perceived value. A government seemingly hellbent on building housing will make such housing common and the perceived value goes down. Likewise a builder who just builds twenty homes in a private tract will be rewarded by the market who see those as potentially increasing in value because of supply and demand.

It all boils down to the market. In a world where money is not backed by real work (aka taxed earnings or printed money) the market immediately devalues those dollars and the things they can do.

Somebody has to work. And they will only work for a certain amount of value. So the government has to pay the bakers and the house builders, but the finished product's value is still going to be punished by the market based upon perception.

Otherwise we could just print up trillions all day long and every person could be a trillionaire - aka late 90s "IPO economics" where billions were minted in stock, only to evaporate as soon as the market realized the companies were worthless.

One can't fool the market. As soon as it gets wind of whats going on the day of reckoning comes fast. Our dollar is in the toilet, like the Euro, because of a market that does not reward high debt.