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Why Are Your Children Buying Houses for Ben Bernanke?

ben bernankeEvery 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.

You didn’t think the Fed was owned by the government, did you?

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.

So, where will the money for paying off those bonds come from? From taxes, of course.

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:

ben bernanke

So, Mr. and Ms. America, get ready to meet your new landlords: Benny and the Banks.

Paul Rosenberg

{ 15 comments… add one }
  • Bud Wood August 6, 2013, 6:34 pm

    Charts such as the one above, going from 63% to 69% are limited in information but are scary because it looks like things are really falling towards zero. But they aren’t!

    • Luxomni August 7, 2013, 3:37 pm

      A truncated graph may save real estate on a printed page, but it puts the lie in How to Lie With Statistics. If the y-axis of the graph graph went all the way to zero we would see that 6% change as not so drastic. But this is a computer screen and the page can scroll down to infinity, so can be no doubt that the author is trying to mislead us.

  • Lucas Dupim August 7, 2013, 3:11 pm

    Wait, but the plan is to:
    1 – Householders keep their property paying their mortgages (since they are employed)

    2 – Banks recover the $$ they lent

    3 – Treasury keeps the wheel turning, and keep collecting

    Where’s the flaw?

    • iphonetechtips January 14, 2014, 8:05 pm

      I would put odds the majority of these homes that are worth less than the total owed on the loan and/or the loans are high risk. If they aren’t high risk all that has to occur for the bank to own the houses outright by foreclosure is to send the economy into a deeper recession so more lose jobs & can’t pay the mortgage. I would also say the same regarding the prices of homes that these loans are take. out on are much lower than the median home price, meaning the number of homes they’re basically buying (or rather placing a pretty solid bet as to the buyer’s failure to pay the mortgage) is much higher.

      The end goal of bankers & elite “ruling class” is to do away with property ownership, like in England & much of the western countries as well as most of the eastern countries. A return to serfdom & futile lords, this gives them more power & control by removing the practice of generational wealth in the middle class keeping everyone busy trying to get by they don’t have any time for learning or dissent.

      And more to the root of your comment of “what’s the problem?” The problem is the 20th century was the biggest advancement for the ruling elite in a long time. All the wealth that was made by the middle class during the latter half of the past century was primarily stolen by way of taxation, inflation & interest, all caused by legislation passed in 1913, the Income Tax act & the Federal Reserve Act

      • Frank Steven February 7, 2014, 9:26 pm

        So the only solution for USA and World is to repeal that 1913 Fed creation legislation along with getting rid of the 15th & 16th admendmends, also passed in 1913, to the USA Constitution which got us to this depressing point in history by destroying the carefully crafted balance by Founders of the power between individuals, states, and their government. The bank failures before 1913 that the Fed was created to prevent can be accomplished through smart regulation today.
        The Founders did not want a central bank (“Fed”) for fear of the corruption that can destroy the Dollar. The “Fed Papers” discussions highlights this power struggle.
        The Founders did not want Government to have an income tax for fear it would destroy capitalism and dollar through bad allocation of money (see Fannie Freddie, etc) and creation of crony capitalism with extreme socialism on top… today’s unsustainable financial reality. Before 1913, the Supreme Court of the USA declared in cases that it is unconstitutional for the government to collect income taxes. So the Constitution was changed.
        The Founders did not even want individuals to elect BOTH Houses of Congress, just the House, to avoid individuals corrupting the system as well asking for ever larger, unsustainable transfer payments, for example.
        Having democratic election of both House & Senate chambers, although sounded great in 1913, has had the effect of the extreme partisan fighting seen today in 2014 AND has unbalanced the careful balance of powers between individuals, state, and government. The Senate, before 1913, was populated through each state’s government. Now you will have States like Texas feel unimpowered and will want to eventual separate from the Union when another huge Depression it warned against hits.
        True Freedom the USA enjoyed from 1776-1913 is what will create sustainable wealth long-term for the most people without all these financial bubbles that creates inequality and bankrupts the nation in the end. Best to all.

  • 'Teresa Enochs Smith-Garner August 7, 2013, 3:51 pm

    Hello to all the Trolls!

  • Anand Venigalla August 7, 2013, 8:22 pm

    The reason I sympathize with those who say that the Fed is owned by the government is because those who say it is a private bank usually are Greenbackers who shudder at the word “private” for anything (even if a bank is full-reserve). Tom Woods has some words about these types of people (www.tomwoods.com/paper/). And many of them claim that Austrian school economists are shills for the big banks, (http://www.tomwoods.com/blog/we-austrians-are-shills-for-the-bankers-says-critic/) pointing out to Ludwig von Mises’s being funded by the elite (http://bastiat.mises.org/2012/08/was-mises-bankrolled-by-the-financial-elite/ answers these claims).

    Anyways, whether or not the Fed is “private,” it is most certainly anything but a libertarian bank. It is a mercantilist institution (http://archive.lewrockwell.com/rep2/fed-is-mercantilist.html), and so called “public” (read: government) banking will not help us in the long or short run.

  • rejecttyranny August 7, 2013, 8:32 pm

    Factor in up keep costs ( new a/c, carpet, painting etc.) after tax dollars to make payments, interest, and you will find that homes are not an investment for the future owner in 15 plus years at all. Best thing I ever did was to pay cash for my homes ( yes, like an idiot we lived very frugally and saved after tax dollars). I have encouraged my adult children to only pay cash unless they enjoy paying off and maintaining someone elses property. In that case, rent. Leave the upkeep to the real “owners” invest the cash not invested in a home ( buying and flipping items for cash) and take wonderful vacations. Do not participate in the bank and government scam.
    Now we hear Obam wants to re-vamp the mortgage industry which is BS speak for Stealing Americans Wealth 4.0.

    • Joe Def August 15, 2013, 10:07 pm

      as long at they have the power of property taxes …you didn’t pay off shit !! when and if they need the money or more they will just raise your p taxes until your broke too or they will just bleed you longer than the rest …should have bought an asset that they cant tax …hmmmmmmm

  • calhar August 8, 2013, 1:59 am

    They are also buying the homes of seniors with “reverse mortgages”.

  • mike August 8, 2013, 4:23 am

    Owned by the bankers? Get to the point and tell it like it is for god’s sake. Owned by the Jews ( Rothchild and Co)

    • JdL August 8, 2013, 12:07 pm

      Owned by the bankers? Get to the point and tell it like it is for god’s sake. Owned by the Jews ( Rothchild and Co)

      What is the relevance of whether some, or even all, of the bozos are Jews? Do you mean to tar all Jews as criminal oligarchs? If so, you’re way off base. If not, the Jewishness of these criminals is completely irrelevant.

      • iphonetechtips January 14, 2014, 8:28 pm

        This is just a divide & conquer technique. Like you stated, their CLAIM of being Jewish has nothing to do with the fact they are thieves, although these men (like all powerful groups) have hijacked religion for their own purposes. Through a 100+ year plan of social engineering & propaganda called Zionism, they have used the historical plight of the Jews to suit their agenda – instigating wars to profit from loans made to both sides (which spans much larger both idealogically & geographically than the public perception of Zionism & religious nationalism of Israel) & the subsequent plunder of resources after the war ends. Their primary goal financially in each of these nations is to implement a central bank to control their money, with almost all the world’s money in their control they have unlimited power as long as people choose to accept their system of debt money, refuse to learn from history & take the word of governments, media & corporations as the gospel truth.

  • PlasticMoney888 August 17, 2013, 7:16 pm

    . I am no fan of the FED but:

    “The Fed uses dollars to buy bonds from the US Treasury.”

    Not exactly the FED buys bonds only on the secondary market including
    prime brokers. Not from the treasury. It ends up being the same except that
    Prime Brokers mostly Banks” take there cut and it looks less obvious that
    the treasury auctions can be orchestrated in a way that you would think it’s a
    real market.

    Yes the FED his private but its important to know that the Fed pays 97% of it’s
    revenue back to the Federal Government certainly not all to it’ s shareholders.
    (They do however benefit in several differently ways)

    “But it also means that your children have to pay off the bonds!”
    Not so sure.
    The FED has been re-inflating all kinds of assets including Toxic assets that
    will in some cases not even be paid back. It has tried to slow and prevent the
    market from deleveraging by overpaying for assets in favor of the Big Banks
    negative Balance Sheets. The FED has now more than 3.5 trillion of Securities.
    purchased during a period of historically low interest rates. They basically
    bubble them self-up in a trap to save the Banking System from years of the FED’ s easy money policy and now they could never sell without huge losses. This is kind of scary since if for any reason rates start moving up this portfolio, (the largest in the World) would collapse.

    This entire process should really be called the biggest transfer in the History of the world. I don’t think it will be paid by our children, it won’t go that far. It is
    partly being paid now via the suppression of Interest payment. After Inflation and
    Taxes = (Negative rates) What do we call a borrower that no longer makes
    interest payment? He is in default; Banks call it “Non-performing
    loans”. This means that if we buy State Bonds they benefit from our
    money for free and we get a negative return.= Lenders $ can not be spent out in
    the real economy = Presently hundreds of Billions of dollars from retirees moving out of spending into recapitalization of mismanaged institutions = Engineered Transfer.
    The defaulting entities are re-capitalizing them self or maintaining their irresponsible
    behaviors at the expense of responsible savers that in many case are either burning their savings or take dangerous risk chasing yield which could wipe them out.

    The other way it will be paid is via currency debasement.
    For now only financial assets have been re-inflated via the FED spending orgy and the expected big consumer prices inflation as not materialized, that is because it is still hiding in the historically high excess Bank Reserve.
    Remember that Excess Reserve increase every time the Fed buys assets and guess what? Banks get 0.25% on it for doing absolutely nothing= Money that
    the FED will not pay back the to the Federal Government= About 5 billion per year. Call it a subsidy in disguise. When reserve (Money Base) start to decrease = Currency circulating in the public will start to increase (Money Supply) that’s when
    inflation will hit the fan and that is how it will all be paid in the end.

    They obviously knows that the 85 Billion per month his not going into the real economy it was never their goal in the first place. The FED own statistics, Last month 51% actually when to foreign banks. ???

  • Dawn Owens September 13, 2013, 4:25 pm

    In an interesting game of Round Robin combined with Musical Chairs, the money is going to China mostly. THEY are the ones who bought all the mortgage backed securities, i.e. the mortgages that have since gone kablooie, and that has to be where the Ben Bernanke money is going. We’re in a death spiral with a country that has 1/3 of the population on the planet and is poisoning their water and air supply to make plastic pumpkins for idiots in the West.

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