$6.5 Trillion Lost, One House at a Time

05-10-2011 • OfTwoMinds.com/blog

So the owner actually lost purchasing power in owning this house for 15 years. Minus commission and closing costs, the proceeds were around $237,000, which is about $33,000 less than the inflation-adjusted break-even point of $270,000. Yes, there is the mortgage deduction and tax breaks to factor in, but considered strictly as an investment, the nominal and real gains in real estate still matter. Put another way: a house purchased in 1996 for $100,000 has to be worth $142,000 today just to keep up with inflation. Factoring in transactions costs, then the house would have to be sold for roughly $152,000 for the owner to extract $142,000--the sum needed to simply maintain purchasing power. In other words, a house that rose 50% over the past 15 years has simply kept pace with inflation. The nominal "gain" is utterly illusory.

1 Comments in Response to $6.5 Trillion Lost, One House at a Time

Comment by PureTrust

Entered on: 5/10/2011 7:58:35 AM

When the money was originally loaned to the homeowner, by the Fed, through a local bank, it didn't have any value. The Fed had created it out of thin air.

Now that much of the original has been repaid and re-loaned - maybe many times over - it might appear to have value... because the homeowner and others repaid it with the sweat off their backs. So, it appears to have the value of their labor.

This is a deception, designed to change the focus. It still never had any value in the first place. Because of this, we never borrowed anything in the first place... except, maybe, thin air.

If we didn't borrow anything, there is no way we can repay it. There is NO WAY. It is IMPOSSIBLE to repay something you didn't borrow, no matter how many pieces of paper say that you borrowed it.

So what is it if it isn't a repayment? It is a GIFT to the banking system.

ALL the money gets GIFTED to the banks. ALL of it, since it was all "non-loaned" in the first place. So, where do we get the money to pay the interest? Oh yeah, we "non-borrow" it from the banks.

Congress, the President, and all the judges know about and endorse this scam. You are being royally screwed by your own Government.