stimulating housing demand will cure the economy

[P@triot]

Quotation: "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation,

dear, this is why the banks don't control the currency. The government does through what they call the Fed. Why not look it up??
Welcome to Econ 101, class one day one?

You really don't know doodle squat economic history, do you?

The government controls the FED?

You might want to ask Nixon, Ford, Carter and Reagan about that.

They might have a very different POV about who CONTROLS the Fed.

Because they know, unlike you, apparently, that the FED decides for itself.

Really stupid? So the FED is a private entity? Better yet, FED personnel is not appointed by the President? Mmmm - that's funny.

Sorry, but it is government controlled and anyone who thinks otherwise is a monumental idiot.....

 

[P@triot]

But when BANK debt is repaid, the money “vanishes”. .

of course thats not true.

wrong -- borrowing from banks expands the money supply; paying back banks reverses the process, "undoing" the expansion, and contracts the money supply.

Separately, the Fed can expand or contract the money supply, to offset such effects

Really? So when the bank is paid back, with interest, the money magically evaporates? Can you people be any dumber?

A bank making money (again, through interest) expands the money supply exponentially more than anything else because now they have more to loan.

It's the same old tired, stupid shit with you Communists/Marxists/Socialists. You're ideology is proven to be a failed one, yet you people just can't let it go. Implying that borrowing endlessly improves the economy and paying back loans hurts the economy is stupid beyond words.

 

[Widdekind]

of course thats not true.

wrong -- borrowing from banks expands the money supply; paying back banks reverses the process, "undoing" the expansion, and contracts the money supply.

Separately, the Fed can expand or contract the money supply, to offset such effects

all agree Fed is most important in making money vanish and disappear. In fact it is their main reason for being. Banks can be making new loans as they are repaid and so not changing money supply so long as they maintain reserve requirement.

ignoring all else, in the moment that a bank loan is repaid, in that moment the money supply contracts. Over-simplistically, the Fed finds out the next day, and offsets the effects. But, ceteris paribus, repaying bank debt "destroys" money, and contracts the money supply

So when the bank is paid back, with interest, the money magically evaporates?

yes, the money "vanishes". Overall, the banking system tends to expand the money supply; and the Fed can offset any effects, in the mid-to-long term (6 months or more). But in the moment that a bank loan is repaid, the bank shrinks its balance sheet, simultaneously erasing the loan (a bank asset, like an accounts receivable), and a deposit (a bank liability, like an accounts payable) from which that loan was repaid.

If a loan from one bank is repaid, with a check from another bank (a deposit account at that other bank); then the check has to "clear" first, when the other bank transfers cash to the first bank. Strictly speaking, what i've said is true, for the entire banking system, viewed as "one big bank(-ing system)". When bank loans are repaid, some deposit (liability at some bank) is transferred through the system, until it cancels out the loan (asset at some bank).

i'm not an expert. If i'm wrong, please cite some source. But that is my current understanding -- repaying bank loans makes money "disappear", off of bank balance sheet accounts; and out of the economy, "into thin air"

 

[Rshermr]

But, if you cared to look, simply google founding fathers and corporations

too stupid and perfectly liberal as usual. Founders had no concerns about corporations since there were no corporations to speak of. Those that did exist were huge crony capitalist organizations granted monopolies by European governments for the benefit of the government!!!

Ed,
You forgot to do that research I suggested. Should not call people stupid when it is you that knows nothing but what your tea party bosses tell you.

Consider: In 1816, Thomas Jefferson wrote, “I hope we shall crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.”
Even Founding Fathers had concerns about corporate cash and influence | PennLive.com

The money powers prey upon the nation in times of peace and conspire against it in times of adversity. By Abraham Lincoln - not a founder, but interesting, eh, ed.

Jot America: Should corporations have free speech? What did the Founding Fathers think?

And we could go on and on. Tea party dogma is no substitute for research.

 

[uscitizen]

Stimulating Housing Demand



When the housing market collapsed four years ago, many economists and federal regulators blamed excessive leverage on Main Street and Wall Street for the crisis. Now, years later, the unwinding of that massive debt -- known as deleveraging --is slowing the economic recovery, says Mike Konczal, a fellow at the Roosevelt Institute, a left-leaning think tank.

"Mortgage debt is the real core problem" for the economy, Konczal told The Daily Ticker.

It's estimated that 23 percent to 31 percent of homeowners owe more debt than their homes are worth, said Konczal. Not surprisingly, many are trying to pay off that debt, leaving less money to spend on anything else, and that drop in demand is causing high unemployment. He calls it a "balance sheet recession."

Nope. JObs will cure the economy.
Housing is still overpriced compared to income, etc.

 

[Widdekind]

Stimulating Housing Demand



When the housing market collapsed four years ago, many economists and federal regulators blamed excessive leverage on Main Street and Wall Street for the crisis. Now, years later, the unwinding of that massive debt -- known as deleveraging --is slowing the economic recovery, says Mike Konczal, a fellow at the Roosevelt Institute, a left-leaning think tank.

"Mortgage debt is the real core problem" for the economy, Konczal told The Daily Ticker.

It's estimated that 23 percent to 31 percent of homeowners owe more debt than their homes are worth, said Konczal. Not surprisingly, many are trying to pay off that debt, leaving less money to spend on anything else, and that drop in demand is causing high unemployment. He calls it a "balance sheet recession."

Nope. JObs will cure the economy.
Housing is still overpriced compared to income, etc.

your words are bogus. When people stop spending (to pay down debt), then they stop going to movies & restaurants, and stop buying new cars & appliances; and all those businesses fire a few workers, and cut back everybody else's hours. "Your job is based on somebody else's spending. When they stop spending, you lose your job." (as it were)

 

[editec]

People either understand why the privately owned bank, the FED, controlling the amount of species is bad, or they don't.

Clearly many of you can't quite fathom the problem.

But some of you seem to think that the FED takes its marching orders from the POTUS.

Nixon, Ford, Carter, and Reagan would definitely NOT agree with that theory.

The FED takes orders from NOBODY in government, kiddies.

 

[EdwardBaiamonte]

The FED takes orders from NOBODY in government, kiddies.

The president appoints the Fed Chairman!! Bernanke, Chairman, was a college professor who employs the wisdom gained from a lifetime of mainstream macroeconomic study. He gets paid a salary and not a penny more!

Your conspiracy theories point to your low IQ.

 

[P@triot]

Will stimulating liberals mind's cure their stupidity?

If so, that is something I would approve even the federal government of investing in!

 

[Rshermr]

Will stimulating liberals mind's cure their stupidity?

If so, that is something I would approve even the federal government of investing in!

Study says racists and conservatives are dumb — RT
rt.com/usa/news/conservative-ideologies-science-group-477/

Got any studies saying that dumb leads to being a liberal???

 

[uscitizen]

Stimulating Housing Demand



When the housing market collapsed four years ago, many economists and federal regulators blamed excessive leverage on Main Street and Wall Street for the crisis. Now, years later, the unwinding of that massive debt -- known as deleveraging --is slowing the economic recovery, says Mike Konczal, a fellow at the Roosevelt Institute, a left-leaning think tank.

"Mortgage debt is the real core problem" for the economy, Konczal told The Daily Ticker.

It's estimated that 23 percent to 31 percent of homeowners owe more debt than their homes are worth, said Konczal. Not surprisingly, many are trying to pay off that debt, leaving less money to spend on anything else, and that drop in demand is causing high unemployment. He calls it a "balance sheet recession."

Nope. JObs will cure the economy.
Housing is still overpriced compared to income, etc.

your words are bogus. When people stop spending (to pay down debt), then they stop going to movies & restaurants, and stop buying new cars & appliances; and all those businesses fire a few workers, and cut back everybody else's hours. "Your job is based on somebody else's spending. When they stop spending, you lose your job." (as it were)

I said jobs not spending.
We are a consumer based spending economy and as long as we are that we will never really grow back to where we were.
We became a debtor nation under Reagan.

You may have been programmed too much by the current economic gurus who make money off of imports and retail sales.

 

[EdwardBaiamonte]

When they stop spending, you lose your job." (as it were)

what? if they stop spending and burn the money that is true, but if they stop spending on the movies to make CC payments or home loan payments, for example, the money is merely spent elsewhere to stimulate employment elsewhere.

The Great Depression actually saw a 1/3 drop in money supply as if someone had actually burned the money. This time the money is there, and then some, but there is no velocity because of liberal government interference and liberal government uncertainty.

 

[expat_panama]

...It's estimated that 23 percent to 31 percent of homeowners owe more debt than their homes are worth...

Nope. JObs will cure the economy. Housing is still overpriced compared to income, etc.

your words are bogus...

My take is that it's the issue that's bogus.

There're actual records of home prices, foreclosures, and private debt, and they show how prices have been stable for years, foreclosures are down, and so is private debt. We don't hear about it much because apparently good news doesn't sell.

 

[Widdekind]

Housing is still overpriced compared to income

There're actual records of home prices, foreclosures, and private debt, and they show how prices have been stable for years, foreclosures are down, and so is private debt.

The ratio of house price ($), to income ($/year), represents the average time (years) needed to repay mortgages. In the 1980s, prices tracked incomes. In the 2000s, the housing bubble pumped up prices, which have since crashed, back down to previous 1990s levels. Overall, incomes are higher, and house prices lower, than they were 5-10 years ago:

 

[Widdekind]

When they stop spending, you lose your job"

if they stop spending and burn the money that is true, but if they stop spending on the movies to make CC payments or home loan payments, for example, the money is merely spent elsewhere to stimulate employment elsewhere

Banks expand the money supply by making loans (money is "created"). When those loans are repaid, money is brought back to the banks, and is "destroyed" (contracting the money supply).

The official supply of "money" includes currency (cash in public circulation) + deposits. Bank reserves (cash in vaults) are not "money" because they are sequestered in banks, to prop up deposits. When banks make loans, extra cash in their vaults is loaned out to borrowers, and so re-circulated. Currency increases, increasing the money supply. Typically, the borrowed-and-re-circulated cash is immediately spent -- on cars, boats, houses -- and quickly re-deposited, back into the bank(s). The cash is de-circulated, back into bank vaults, as reserves. Currency decreases, swapped for deposits. So the total "money" supply (currency + deposits) stays the same. Soon, the cash is re-loaned, back out into the economy, to some other borrower, for some other purpose, repeating the process, etc..

Typically (?), when loans are repaid, somebody has "money" in a bank deposit account; goes to the bank; and writes a check, transferring "money" out of their deposit account (deposits decrease) to pay off the loan. That decreases the supply of "money". The money supply contracts. On their balance sheets, the banks erase the loan (bank asset, their accounts-receivable); and the deposit (bank liability, their accounts-payable).

Only if bank loans are repaid with actual hard cash currency does the "money" supply not contract. Then the banks adjust their balance sheets, entirely on the "assets" side, erasing the loan, and adding the cash. The money supply does not contract. But otherwise, erasing the loan, on the "assets" side, requires erasing some deposit, on the "liabilities" side, of their balance sheets. In practice, how often are home mortgages repaid, with actual suitcases of cash ? Generally, bank lending expands the money supply; re-paying banks contracts the money supply. Thus, the repayment of a trillion dollars of mortgage debt, ultimately from banks, over the past four years, has exerted huge contractionary pressures on the US "money" supply. Instead of borrowing inflating the money supply, debt reduction has deflated the money supply. Instead of spending stimulating the economy, saving to re-pay banks has stalled the economy.



web reference
Economics: Supply of Money

 

[Widdekind]

From mid 2008 - mid 2009, the prices in the US fell -8% below trend (instead of inflating, they deflated). From 2006-2008, personal debt growth decelerated; and finally stopped, reversing into deleveraging, in 2008 -- coinciding with the mini-deflation in price-levels. But also, that mini-deflation coincided with businesses (and banks) deleveraging. And, once businesses began borrowing again, spending swiftly picked back up, and price-levels re-flated, to pre-2008 trends.

The following figure plots:

• inflation rate (red line)
• personal debt growth rates (green lines)
• business debt growth rates (dark blue line)
• bank debt growth rate (light blue line)

Inexpertly, bank debt represents banks borrowing from each other, moving accumulating excess reserves from places where people are saving; to places where people want to be borrowing. Bank debt allows people to borrow in Portland, when people are saving in Boston. Bank debt lets money move across the country, and across the economy, facilitating borrowing & spending. Business debt actually pumps money straight into the economy, as businesses borrow to expand operations, hiring workers, etc. Perhaps business deleveraging also deflated the US economy in 2008-2009 ? Over winter 2007-2008, business borrowing surged; +6 months later, price inflation spiked. Then, persons stopped borrowing entirely, and began paying down debt; and prices deflated over the next +12 months, during which time business & banks stopped borrowing, and began deleveraging too.

 

[Quantum Windbag]

Stimulating Housing Demand



When the housing market collapsed four years ago, many economists and federal regulators blamed excessive leverage on Main Street and Wall Street for the crisis. Now, years later, the unwinding of that massive debt -- known as deleveraging --is slowing the economic recovery, says Mike Konczal, a fellow at the Roosevelt Institute, a left-leaning think tank.

"Mortgage debt is the real core problem" for the economy, Konczal told The Daily Ticker.

It's estimated that 23 percent to 31 percent of homeowners owe more debt than their homes are worth, said Konczal. Not surprisingly, many are trying to pay off that debt, leaving less money to spend on anything else, and that drop in demand is causing high unemployment. He calls it a "balance sheet recession."

Great idea, I wonder why no one tried it before.

Wait, they did, and it caused what Obama has repeatedly called the worst economic crisis since the great depression.

[ame=http://www.youtube.com/watch?v=6MT3CihStFQ]Forrest Gump stupid is - YouTube[/ame]

 

[expat_panama]

...incomes are higher, and house prices lower, than they were 5-10 years ago:

--and the economy is saying "Stumulus? We don't need no steenking stimulus!"

 

[Widdekind]

Mike Konczal says about a quarter of all US homeowners owe more, than their houses are (now) worth; and so they are paying down debt quickly. Total mortgage debt has been decreasing by nearly a quarter trillion dollars per year; and there are over a hundred million "households" in the US. Extremely approximately,

1/4 x 100 million households <----> 1/4 trillion dollars per year

1 household <----> $10K / year​

So, debt-ridden homeowners may be repaying mortgages at an average rate of $10K / year per debtor household. 25 million such homeowners could account for the $250B / year of net debt reduction. Are all "households" actual home owners, or do official "households" include renters ?

 

[EdwardBaiamonte]

stimulating housing demand will cure the economy

it sure will!!! especially given that stimulating housing demand caused the current depression!!!