Your Loyalty and Your Submission “Anyone who has ever taken out a mortgage will be unsurprised to learn that it is, literally, a death pledge.”
— Mark Forsyth  The proposal for 50-year mortgages leaves a lot to be desired November 27, 2025 — It’s Thanksgiving week. And in the spirit of our fake money era, we give fake gratitude. Comes this gem from USA Today: Trump proposes 50-year mortgage.
Bless his heart. POTUS is trying to be helpful. He’s trying to solve the problem caused by too much credit...with more credit!
Housing has never been so un-affordable. The average family income is around $80,000. But the income needed to buy an average house is around $120,000.
What are America’s families to do? Drink muddy water and sleep in hollow logs?
The cause of this problem is not hard to find. The Fed caused the first mortgage finance crisis by dropping its key rate from 6% in 2001 to only 1% in 2003. This set the housing market a-tingling. Remember the ‘lo-doc’ mortgage loans? All it took to get a mortgage — guaranteed by the feds — was an application. Then, when the Fed tried to bring rates back into a normal zone, it triggered widespread bankruptcies, defaults and foreclosures.
So, the Fed cut rates again...from over 5% in 2007 to under 1% in 2009. Adjusted for inflation, rates remained under zero for most of the next fifteen years. This led to a huge new bid for housing...much of it coming from institutional buyers able to tap into the Fed’s low rates. The new demand led to the highest prices ever — now averaging about $100,000 more than the typical family can afford.
As to Trump’s solution, Charlie Bilello comments: So the very cause of the problem is being proposed as the solution?
Correct. And on top of that, a 50-year mortgage would more than double the amount of interest paid compared to a 30-year. And only 5% of payments in the first 10 years would go towards principal with 95% going towards interest. Doesn’t sound like a panacea to me.
You can check the math easily. Just go to one of the many ‘mortgage calculators’ on the internet. They’ll show you that an average house today costs $420,000...and an average 30-year mortgage rate is 6.24%. You would have to make total interest payments of $407,000 before you were mortgage-free. Raise the term to 50 years and the interest rate goes to 6.72%, with total interest payments of $837,000...and you never own the house.
Thank you, Mr. President?
Today, we’ve interrupted our romp through the funny money world...exploring the link between crooked money and crooked behavior...to give thanks for the whole funny money system.
Also in the news, the money supply (M2) in the US just hit a new record high, at $22 trillion. That’s up from just $650 billion in 1971, when the Funny Money Era began. In that year, GDP was around $1.2 trillion; it’s now $28 trillion. In other words, the money supply has grown about half-again-as-much as the supply of goods and services.
And public and private debt — the dark side of credit — has gone up even more...from 125% of GDP in 1971, it is now around 260% of GDP. In other words, for every dollar’s worth of GDP in 1971 (before the Funny Money Era began) there was $1.25 of debt. Today, there is $2.60. That’s an additional 135% of GDP — or $38 trillion worth of spending that is untraceable to any increase in output. Naturally prices have gone up to absorb the additional liquidity.
But we’re not here to kvetch. Not today. We’re here to give thanks. And our gratitude overfloweth. Fortune: Trump promises to send $2,000 tariff dividend checks ‘probably the middle of next year...
In ancient Rome the ‘annona’ was a system of giving out free grain to buy the loyalty — or least the submission — of the urban proletariat. In Argentina, Eva Peron handed out Christmas presents to poor children. And now in 21st century America, there’s a turkey on every table and a $2,000 ‘dividend’ check in the mail.
Calling it a dividend is in keeping with the whole fraudulent project. ‘Dividends’ come from earnings. But there are no earnings involved. Just the tariff revenue...which is more like a sales tax on Americans than a levy on foreign producers. At best, you might call it a tax rebate. But the tariff tax is only expected to bring in about half the cost of the ‘dividend’ checks...which means, the bulk of the expense will be borrowed...added to the national debt...and will ultimately show up in more inflation.
This is the same policy followed by Mr. Trump in his first time at bat. And what a success that was! A home run.
His Covid-era stimmies added as much as $3 trillion to US debt...and drove up the inflation rate to 9% — the highest in forty years. Then, of course, prices never went back down and now are about 25% higher than they were in 2020.
Muchas gracias. Merci beaucoup.
Thanks a lot.
Regards,
Bill Bonner
Bonner Private Research & Grey Swan Investment Fraternity Continued Below... | 
Inside zip code 78521, Elon Musk quietly launched a new city. Almost no one knows it exists… yet. But Ian King says this is where Elon’s next massive IPO is being born — and a public company already tied to it could soar. A strange device at the center of this city could change the internet forever — and Ian’s found the ticker quietly connected to it. But you’ll want to move fast… Because a big reveal could come by December 31st. Click here to see the full story. | P.S. from Addison: Have a wonderful Thanksgiving weekend! Our offices will reopen on Monday.
We encourage you to take a moment and review this unique trading strategy from uber trader Tim Sykes.  If you have requests for new guests you’d like to see join us for Grey Swan Live!, or have any questions for our guests, send them here.
How did we get here? Find out in these riveting reads: Demise of the Dollar, Financial Reckoning Day, and Empire of Debt — all three books are now available in their third post-pandemic editions. You might enjoy one or all three.  (Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites: Bookshop.org, Books-A-Million or Target.)
Please send your comments, reactions, opprobrium, vitriol and praise to: feedback@greyswanfraternity.com |
Post a Comment
Post a Comment