economics

A couple of alarming news pieces came to my attention. The first is that American homeowners lost more than $1.5 trillion in home equity in the past six months. The reason for this is that most people can no longer afford mortgage payments, so the buying of homes has cooled. The monthly payment on the average home, with a 20% down payment on a mortgage, is up nearly $1,000 since the start of the year.

The second major warning sign is coupled to that- borrowing. Mortgage debt rose by $1 trillion from a year ago, to $11.7 trillion. Mortgage and home-equity debt combined are up by $2 trillion since the pandemic began. In fact, the Wall Street Journal reports that Home-equity lines of credit were up 40% in the second quarter from a year earlier. Overall, Americans are carrying a record amount of debt. It isn’t just mortgages, either: Credit-card debt also increased by the most in 20 years, with balances rising by 15% from a year earlier. The surge comes as the average interest-rates on card borrowing has climbed above 19%, the highest in data going back to the mid-1980s. Auto loan balances rose by $22 billion in the third quarter and are now above $1.5 trillion, roughly double the figure a decade ago.

With all of this debt, along with declining equity, the American economy is still rolling solely because Americans are borrowing from their future retirement. People are continuing to spend and maintain a standard of living that their income no longer can support. They are doing it by borrowing more than they can repay and doing it at sky high interest rates. Sooner or later, these debts will need to be paid. Remember- all debts are always paid by someone, if not the borrower or the lender, someone will have to pay the bills.

Imagine if you will, some faceless government bureaucrat sees that you made a comment that was unflattering to his daughter. With the click of a button, you are made penniless.

Or perhaps they are just keeping an eye on you. So they log into the central dollar database to see where you are spending your money, and what you are buying.

A system like a social credit score could allow the government to control everything you do and say, upon penalty of being made a financial pariah.

It’s easy when the US has an all digital currency, which the US Federal reserve and some major banks just began testing.

In my post the other day, I talked about how inflation was causing groceries to be more expensive. How about restaurants? A year and a half ago, an original grand slam from Denny’s cost $9.29. Today, that same breakfast costs $11.59. That is a 24.7% increase in just 18 months, or an annual increase of 16.5%.

The government is telling us that year over year inflation was 7.7% for October 2022. That is something that Biden is celebrating. Meanwhile, a dozen eggs in my neck of the woods costs $4.49, stew meat is $6.99 a pound, and ground chuck is selling at $7.99. The same week last year, eggs were $2.99, stew meat was $3.99, and ground chuck was $4.99. That is an increase of 50%, 75.1%, and 60.1%, respectively. Perhaps that is why they don’t include food when they are calculating the rate of inflation.

You will note that I didn’t include the cost of gasoline. The reason is that the oil market is being deliberately manipulated by the sale of oil from the SPR.

People are being fooled into thinking that increased prices=inflation. That isn’t the case. Inflation is caused by a currency losing value. This is reflected in higher prices, but the higher prices themselves are not inflation, they are merely a symptom of it. I expect that, now that the election is over, fuel prices will return to their true price. Still, many Americans are stupid enough not to know the difference and to continue voting for the same old people.