Loan Penetration by Banks destroys home ownership rates worldwide.

[Matt4Liberty]

Sorry I misunderstood. So you want the Federal Reserve to pursue an extremely loose policy to get inflation to double digits so you can have double digit mortgage rates.

Makes a lot of sense. Smart take.

ඔබට පැහැදිලිවම ඉංග්*රීසි තේරුම් ගත නොහැකි බැවින් අපි සිංහල උත්සාහ කරමු. මට අවශ්*ය වන්නේ ෆෙඩරල් මහ බැංකුව කිසිවක් නොකර එයින් stay ත් වී සිටීමයි.

 

[howdynichol34]

Homeownership is the American Dream. It is the chance for all Americans to put down roots and begin making value for themselves and their families. Homeownership has been the way to building abundance for ages of Americans. Furthermore, it has been the way to guaranteeing stable networks, great schools, and safe roads.

Banks loaded up on subprime contracts. When resource costs fell, the banks needed to record the worth of their subprime protections. Presently, banks expected to loan less to ensure their liabilities weren't more prominent than their resources.

The country's biggest credit association by resources, Navy FCU, saw vehicle advance entrance decrease 0.3 rate highlight 11.3% as of Dec. 31, 2018. The organization expanded its charge card credit infiltration by 0.7 rate highlight 32.1%.

 

[Lindsey]

I was looking to see if there's any place that doesn't have property tax. Couldn't find one. There are a few countries however where it's a flat fee at the time of purchase. I would prefer that over constantly paying tax on the same property. At least you can pay off the government and then really own the place.

I'm curious where the flat fee places are.

 

[Snowball]

Inflation of Assets is the true driver of wealth disparity, because wealth today is simply an affect of asset accumulation then inflation.
When the working man has to borrow to buy, the working man works for the bank.
Our system is a system of indentured servitude and the total debasement of morality in economics, it is the philosophical split
that ripped ethics out of economics since Adam Smith was paid to write the Wealth of Nations by the bankers.

SCAM from DAY ONE.

 

[Krugminator2]

I it is the philosophical split
that ripped ethics out of economics since Adam Smith was paid to write the Wealth of Nations by the bankers.

SCAM from DAY ONE.

Adam Smith emphasized morals and ethics more than just about any economist ever.

https://en.wikipedia.org/wiki/The_Theory_of_Moral_Sentiments

 

[Matt4Liberty]

I'm curious where the flat fee places are.

There are a decent amount. Fiji, Seychelles, Cayman islands, Thailand, Georgia, Dominica. If you're in a position where this is important to you, spend some time researching. I found this info by searching for no property tax.

 

[Madison320]

Central banks don't directly determine interest rates by price fixing. Central banks control inflation. And the rate of inflation determines interest rates.

12% mortgage rates implies double digit inflation. So you basically are demanding super easy money from the Fed. And if you are having trouble comprehending this you should move to Argentina. You can get 40% CDs there. You would really be in heaven.

You'd be right if the Fed wasn't buying treasuries and mortgages. But they are and so of course they are fixing prices on interest rates.

Do you really think in a free market private individuals would be loaning the US govt money for 10 years at 1.5%? It's not even remotely possible.

 

[Krugminator2]

You'd be right if the Fed wasn't buying treasuries and mortgages. But they are and so of course they are fixing prices on interest rates.

Buying Treasuries does create demand and demand for a bond means a lower yield. So it is technically incorrect to say the Fed has no effect on interest rates but it is a very good approximation of reality. The effect is not as simple as more buying equals lower yield. More buying could = higher yields in some scenarios. If more buying is inflationary and raises nominal GDP then yields would rise.

Nominal GDP growth is the most important part of interest rates. It is productivity growth + population growth +inflation. So when meathead above says interest rates should be 12% in a free market it makes no sense. Nominal GDP growth has been 4% with a super active pumping money in. Why would interest rates ever be 8% higher than nominal GDP growth?

Do you really think in a free market private individuals would be loaning the US govt money for 10 years at 1.5%? It's not even remotely possible.

Maybe. It is entirely possible rates would be lower. We faced a Great Depression scenario last year. Had the government done nothing nominal GDP would have collapsed like the Great Depression. Interest rates went to zero in the Great Depression when the Fed let the money supply collapse.

Interest rates are always going to be very low in a low nominal GDP environment. 1.5% *seems* low to me. But it isn't wildly off. Historically based on nominal GDP maybe 3-4% is about right.

 

[Snowball]

Adam Smith emphasized morals and ethics more than just about any economist ever.

https://en.wikipedia.org/wiki/The_Theory_of_Moral_Sentiments

he was a snake oil salesman.

 

[Warrior_of_Freedom]

property tax almost $900 a month here, renting my own house

 

[Madison320]

Buying Treasuries does create demand and demand for a bond means a lower yield. So it is technically incorrect to say the Fed has no effect on interest rates but it is a very good approximation of reality. The effect is not as simple as more buying equals lower yield. More buying could = higher yields in some scenarios. If more buying is inflationary and raises nominal GDP then yields would rise.

Nominal GDP growth is the most important part of interest rates. It is productivity growth + population growth +inflation. So when meathead above says interest rates should be 12% in a free market it makes no sense. Nominal GDP growth has been 4% with a super active pumping money in. Why would interest rates ever be 8% higher than nominal GDP growth?

Also the Fed isn't just another buyer, they're a buyer who wants to overpay. And let's not forget all the other central banks buying us treasuries. Do you own any long term us treasuries? You simply can't use long term treasuries rates as a predictor of coming inflation.

And if you want to use nominal gdp as a predictor I'd argue you need to use actual inflation (fed's balance sheet) not the CPI. Actual inflation increased by 100% over the last year.

As I've said many times, if printing money did not cause a proportional increase in prices we could all stay home and let the govt send us checks.

Which makes more sense?

1. Printing money causes a proportional increase in prices, but there can potentially be a long delay.

2. Printing money does not cause a proportional increase in prices, even over time.

 

[Snowball]

property tax almost $900 a month here, renting my own house

It's not even your own house, in most of the country, you don't own alloidal deed.

I realize this statement gets into the weeds of legality, and there's a big difference between owning a home
in an Unincorporated "community" or a sovereign City/Town, however.. the Federal government surely does ACT like it owns us
and all the land. That is, those who own the Federal Government direct it to act in said manner.

Congressman James Traficant speech before Congress, 1993:

https://duckduckgo.com/?q=James+Traficant's+Speech+1993+-+PDF&t=ffcm&ia=web

 

[Krugminator2]

And if you want to use nominal gdp as a predictor I'd argue you need to use actual inflation (fed's balance sheet) not the CPI. Actual inflation increased by 100% over the last year.

Money that doesn't get circulated isn't going to push prices up. The last 12 years have settled this. No 4 zillion percent inflation despite 4 zillion percent growth in monetary base.

As I've said many times, if printing money did not cause a proportional increase in prices we could all stay home and let the govt send us checks.

Writing checks puts money into circulation causing higher prices. Money sitting on the balance of a bank that doesn't get lent does not cause higher prices. If that money never gets lent, inflation never happens. The same Federal Reserve actions that caused increases in the money supply can be reversed.

Which makes more sense?

1. Printing money causes a proportional increase in prices, but there can potentially be a long delay.

2. Printing money does not cause a proportional increase in prices, even over time.

Neither makes sense. Increases in money in circulation adjusting for population and productivity growth will roughly match the inflation rate. Doesn't take 10 years for this happen.

Do you really think in a free market private individuals would be loaning the US govt money for 10 years at 1.5%? It's not even remotely possible.

The Interest Rate Fallacy

Initially, higher monetary growth would reduce short-term interest rates even further. As the economy revives, however, interest rates would start to rise. That is the standard pattern and explains why it is so misleading to judge monetary policy by interest rates. Low interest rates are generally a sign that money has been tight, as in Japan; high interest rates, that money has been easy.

Japan's recent experience of three years of near zero economic growth is an eerie, if less dramatic, replay of the great contraction in the United States. The Fed permitted the quantity of money to decline by one-third from 1929 to 1933, just as the Bank of Japan permitted monetary growth to be low or negative in recent years. The monetary collapse was far greater in the United States than in Japan, which is why the economic collapse was far more severe. The United States revived when monetary growth resumed, as Japan will.

The Fed pointed to low interest rates as evidence that it was following an easy money policy and never mentioned the quantity of money. The governor of the Bank of Japan, in a speech on June 27, 1997, referred to the "drastic monetary measures" that the bank took in 1995 as evidence of "the easy stance of monetary policy." He too did not mention the quantity of money. Judged by the discount rate, which was reduced from 1.75 percent to 0.5 percent, the measures were drastic. Judged by monetary growth, they were too little too late, raising monetary growth from 1.5 percent a year in the prior three and a half years to only 3.25 percent in the next two and a half.

After the U.S. experience during the Great Depression, and after inflation and rising interest rates in the 1970s and disinflation and falling interest rates in the 1980s, I thought the fallacy of identifying tight money with high interest rates and easy money with low interest rates was dead. Apparently, old fallacies never die.

https://www.hoover.org/research/reviving-japan

 

[Madison320]

Money that doesn't get circulated isn't going to push prices up. The last 12 years have settled this. No 4 zillion percent inflation despite 4 zillion percent growth in monetary base.

Writing checks puts money into circulation causing higher prices. Money sitting on the balance of a bank that doesn't get lent does not cause higher prices. If that money never gets lent, inflation never happens. The same Federal Reserve actions that caused increases in the money supply can be reversed.



Neither makes sense. Increases in money in circulation adjusting for population and productivity growth will roughly match the inflation rate. Doesn't take 10 years for this happen.

https://www.hoover.org/research/reviving-japan

Money sitting in a bank reserve WILL ALWAYS eventually get spent. No one hoards money if it can't be spent. Basically you are explaining the lag in prices. And don't forget that fact that stock prices have gone up 400+% since we started printing. You can't tell me those companies got 400% more productive.

Yes, the Fed can contract the money supply, however if they do that the US will default on it's debt, and we'll have a depression far worse than the great depression.

For every Japan I give you Zimbabwe, Argentina, Germany, Italy, Colombia, Venezuela, Chile and hundreds of other examples.

The only thing I have no idea about is how long will the price increase lag will last, since we are the world's reserve currency it could take a long time. If it takes long enough then in practical terms I'd be wrong. But I'm still doing really well with my investments and I have the comfort of knowing I'll do even better if prices take off.

 

[TheTexan]

Money sitting in a bank reserve WILL ALWAYS eventually get spent. No one hoards money if it can't be spent.

The Fed has an ingenious solution to that: IOER.

Eventually the money in reserve will be spent. But I think the banks know that if they touch even a dime of it, it's going to trigger the other banks to do the same. From a game theory perspective things have been in a Nash equilibrium for a while, with banks just taking advantage of the IOER and not touching their reserves.

If interest rates continue to rise however, that equilibrium will break, and when it does, yup, that money's getting spent hard. Bring on the hyper inflation at that point.

 

[Madison320]

The Fed has an ingenious solution to that: IOER.

Eventually the money in reserve will be spent. But I think the banks know that if they touch even a dime of it, it's going to trigger the other banks to do the same. From a game theory perspective things have been in a Nash equilibrium for a while, with banks just taking advantage of the IOER and not touching their reserves.

If interest rates continue to rise however, that equilibrium will break, and when it does, yup, that money's getting spent hard. Bring on the hyper inflation at that point.

Doesn't the Fed only pay like .5% on those excess reserves? I can't figure out why the banks keep doing that.

I always go back to the simplest argument: If it's possible to print money and not cause a proportional increase in prices we can literally all stay home and let the govt send us a check.

 

[Krugminator2]

Doesn't the Fed only pay like .5% on those excess reserves? I can't figure out why the banks keep doing that.

I always go back to the simplest argument: If it's possible to print money and not cause a proportional increase in prices we can literally all stay home and let the govt send us a check.

I have given the same response about six times about why that isn't the case. But I will try a seventh time but use an economist who has gotten everything right the last 11 years. Writing people a check is permanent. Swapping a Treasury for cash is viewed as temporary.

Consider:
1. Interest rates are 7.8% on T-bills. The Fed suddenly doubles the monetary base, and simultaneously announces the money will be withdrawn from circulation two weeks later.

2. Tomorrow Janet Yellen announces that the monetary base will be doubled, IOR will be eliminated, and the Fed will maintain the enlarged base even after it exits the liquidity trap in a few years.


In case one the price level doesn’t change. In case two the price level doubles (or more if you include the QE already done.)

It’s clear from these two examples that the real issue is not zero rates; it’s the difference between temporary and permanent currency injections.

https://www.themoneyillusion.com/qe-works-in-practice-because-qe-works-in-theory/

 

[Madison320]

I have given the same response about six times about why that isn't the case. But I will try a seventh time but use an economist who has gotten everything right the last 11 years. Writing people a check is permanent. Swapping a Treasury for cash is viewed as temporary.

https://www.themoneyillusion.com/qe-works-in-practice-because-qe-works-in-theory/

And for the 7th time, how can anyone possibly think that QE is temporary? The economy is addicted to QE and will collapse if the Fed tried to remove it. Didn't you learn this after QE1, 2 and 3? They were only able to get it down from 4.5 trillion to 3.9 trillion before everything started to fall apart. Now it's over 8 trillion.


https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm

Even if the Fed tried to sell all of its assets it wouldn't come close to getting rid of it's balance sheet since by definition it massively overpaid for the assets it bought.

I'll make a bet with you. I'll bet the balance sheet hits 10 trillion before it hits 6 trillion.

 

[Snowball]

If that happens it will drop prices somewhat but it won't change corporations buying up residential housing.

Very few posters here understand how different financial realities are, operationally, and the changes that have occurred in the last decade, or so. This is one reason why they are still attached to antiquated and misapplied economic ideologies which work against themselves, against the 99%, and therefore, support and maintain the tyranny which they claim to abhor. It is complicated yet simple to understand how this all happened, and what makes it the new reality.

The new reality is that AI and algos, along with ultra-high-speed (fractions of a second) monetary transactions are fully digitized, fully under the control and administration of the new elites, and unlimited in their applications. Virtually every stumbling block set up against them, legislative or administrative by the government, has been removed, whether by practice or protocol.

This is how assets, after they are acquired en masse, are maintained. This is why there doesn't ever have to be another crash, or severe correction, because there is no longer real markets in the new financial world. It is a controlled, managed, and policy-driven exchange where parties participate according to price action which has literally nothing to do with their own transactions anymore. There is no price discovery. There is only price marking. This is done by the operatons of the Fed and its tentacle banks, and its daughter corporations, which exist also in private equity, family offices, and multinational institutions, foundations, and even in the black markets which are connected to cryptocurrency and organized crime.

The encompassing plan is unfolding before our eyes. It is institutionalizing tyranny, politically, militarily, and financially; indeed, it IS finance and capitalism that has driven all the changes, because true capitalism is a game that has already ended. The game is over. You literally cannot play the game any longer. The only player is the bank. This bank distrubutes rewards according to its own interior preferences. It distributes capital to its own members exclusively. The members are all part of a secret group that is given monies from the bank in order to acquire other corporations and assets which are not yet owned by the bank. The bank has unlimited buying power, and its operations are independent of political control. What the bank does is strip political power away from the citizenry by use of the faulty and antiquated laws that are the foundations of Western societies, and the number one is representative government. By influencing representative government, a "capture" occurs, where the system itself is captured, and no longer do the people possess sovereignty.

As the popular sovereignty evaporates, the capitalist cabal who are the very fount of capital itself (instead of labor) endlessly produce more capital through usury and automated currency depreciation, which does not hurt them, because their tap is endless, and cannot therefore depreciate as long as their capital is legal tender. In cases where it is not legal tender, such as in foreign countries, as long as there are global financial exchanges, the capital may be transformed into the legal tender required. This gives the bank a chameleon-like nature, which operates everywhere in the world, except for that small number of countries which actively and institutionally resist and criminalize the bank. Countries which do this are the targets of smear campaigns, coups, military occupations, assassinations, and culture wars, meant to whether by hard or soft power, ultimately assimiliate the country into the bank's partnership.

Statistics prove that, as the bank expands, whether in name or by other countries aligning with cooperative structures that support and condone similar ideologies and financial markets where the bank's capital is not restricted by government, as government is the only power capable of retarding the bank's super-shadow government, what occurs is that the wealth disparity accelerates far beyond what is naturally possible. It becomes permanent, and without actual confiscation of accumulated, concentrated wealth, can never, ever be reduced. The democratic masses consent, cognizantly or not, to their own slavery. Giving up on actual participation in the capitalist system (a game that already ended), their only concern is to beg the bank for inclusion so that their needs may be met. This makes them chattel of the bank, and the bank appoints shepherds in the political realm which manage the dissemination of capital to them, so that opposition to the bank is thwarted.

Loan capital destroys home ownership rates. Mortgages drive asset inflation, dependency on the bank and its markets, asset concentration, and, for the corrupted government officials, higher taxation and increased power, since these shepherds are in a position where the enslaved majority must beg them for subsistence rewards. Ultimately, the so-called middle-class, being priced out of any real competition long ago, drizzles down into the dependent class, with only, perhaps, a small number of them being elevated into the upper class, which is the sphere of control, about 2-3% of the population who, for their own selfish reasons, allow themselves and their institutions to become accomplices and proponents of the bank so that the true ownership, nature, goals, and identities of the bank's inner cicle remain unaccountable in the public discourse, and the paradigm accelerates via their passage and implementation of laws and overriding technological supremacies, which are not fully revealed until they are implemented in the control structure itself, which pervades into everyday infrastructures and every manifestation of society.

 

[acptulsa]

Banks aren't doing any better -- except, of course, the half dozen or so who got in on the founding of the Fed.

https://twitter.com/Cancelcloco/status/1765875881988485585