Every now and then I like to look at government numbers and see what they really mean. I ran into this batch several months ago but hadn’t had time to play with them till now. What I found shocked me so badly that I ran them three times on a calculator and once using exponents. As you’ll see below, these are “Oh my God” numbers.
Here are facts:
The average US house sells for about $300,000, and the Federal Reserve is buying $40 Billion dollars’ worth of mortgages per month. (If that sounds like a bunch of numerical gobbledegook to you, please hang on for just a moment.)
The Fed has been very public about this, by the way. They explain that they are purchasing “mortgage-backed securities” (for your safety, of course), and they surround the discussion in financial-speak. But, in the end, they are buying houses, plain and simple. It’s all there, for those who wish to check.
Now, here are those numbers:
$40,000,000,000 per month, divided by $300,000 per house = 133,333 houses per month.
Let’s round that down to 130,000 to account for the various financing fees and transfer taxes.
So, Ben Bernanke is buying 130,000 houses per month. Kind of shocking, no?
That means that since this program began in September of 2012, the Fed has bought 1.43 million houses.
And, by the way, there is no end in sight.
In Fairness to Ben
Now, to be fair, I should clarify that your kids are not really buying all those houses for Ben Bernanke personally – they’re buying them for his bosses – the owners of the Federal Reserve.
Oh, no. It is owned by the big banks. I’d tell you exactly who, except that no one knows exactly who. We know that people own shares of the Fed banks (there are twelve of them in all), but the US government is keeping the details secret.
Think I’m making that up to be flamboyant? Please, check it out for yourself! They admit that “the big banks” own the Fed, but they never say which ones. A list did circulate in the 1930s, but that was the last time.
How Your Children Are Forced to Pay
You may have heard this before, but if not, hang on to something:
The Fed uses dollars to buy bonds from the US Treasury. These dollars, however, do NOT come from their savings. Instead, they come as a check that is “drawn upon itself.” (That quote is from the Fed’s own documents, by the way – a paper called Modern Money Mechanics.)
In other words, the Fed just makes up the money. They are buying all those houses with money they just make up! (But it’s surrounded with very intricate accounting, of course.)
But it also means that your children have to pay off the bonds!
The Fed sells all those bonds to investors – who will, of course, want their money back, with interest.
When a government sells a bond, they are selling a right to their tax receipts. And that means your kids will be taxed to pay it all off.
The Fed will keep the houses, of course, but hidden behind paragraphs of confusing financial and accounting terminology.
Bye Bye Home Ownership
Home ownership in America is falling off a cliff, as you can see in this graph:
So, Mr. and Ms. America, get ready to meet your new landlords: Benny and the Banks.