Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Buying mortgage backed securities is Boomer Stimulus

 

Buying mortgage backed securities is Boomer Stimulus

Courtesy of 

(you can listen to this podcast above, or find The Goldmine wherever fine podcasts are streamed) 

By flooding the mortgage market with wave after wave of liquidity, more than one year after the start of the pandemic and in an environment of zero percent interest rates, the Fed is still stimulating the sellers of homes. It is actively working against the interests of first time homebuyers, who increasingly cannot transact at today’s home prices. Low mortgage rates are good, but not when they foster an environment in which corporate buyers and the already wealthy can borrow endlessly and drive up the prices of everything on the market.

I’m starting to think there may be no better form of stimulus for the rest of America than for the Fed to withdraw from the mortgage bond buying they’ve been doing. They’re spraying kerosene on a bonfire. It’s unnecessary. We don’t need tens of billions of dollars buying MBS each month. We need the relentless price rises to subside. We are in a 5 million home shortage as it is. Prices do not need to go higher. The sellers have done well enough already. At this point, you’re forcing people into bigger loans to pay for higher house prices, which will actually increase the amount of leverage people are exposing themselves to. For the older sellers, who will then transition to a smaller home or a rental or retirement community, this is great. For everyone else, it’s not. Anti-stimulus.

The best version of economic stimulus historically has been a boom in household formation. Making the household formation process prohibitively expensive by keeping young families trapped in rentals is counterproductive. If you want to support the consumer economy, let the consumer buy a house. No more fuel. Taper the mortgage bond purchases. Walk away and let the chips fall where they may.

I talk about this at the ten minute mark below:

Read also:

Fed mortgage securities purchases draw fire in white-hot US housing market (SPGlobal)


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!