Mike Shedlock on the deliberate government policy to keep people in debt.
Following the publication of an insightful and lengthy piece of research, Mike Shedlock distills the information to highlight what is essentially further proof that government is not acting in the interest of the public.
Below is an excerpt from a typical piece of institutional “advice” (abetted by government) aimed at preventing or at least reducing the number of homeowners walking away from what is effectively a desperate financial situation.
“Losing your home can be the worst and most devastating event to you personally, and your credit history. This is a scenario that you don’t want to occur if you can avoid it! Not only will you lose the comfort of your home and your investment, but a Foreclosure will stay pending on your credit history for as long as 10 years. This will jeopardize your ability to qualify for any future home loan purchases, it may affect your ability to access loans for car purchase and other needed purchases, and loan costs are likely to be higher both in fees and interest paid.”
In an unchecked fiat monetary system, the end of the inflationary trajectory inevitably and necessarily brings about big government – http://mwhodges.home.att.net/piechart.htm -.
Big government is inherently wasteful because as the inflationary trajectory progresses, inflation (expanding credit and money supply) becomes a goal unto itself thus consuming progressively more government resources to maintain the trajectory.
Once inflation becomes the do-or-die of the existence of government, the state has a vested interest in maintaining the nominal value of debt outstanding. Defaulting on a mortgage is the equivalent of deleveraging which is to say that the outstanding debt volume will be reduced thus putting a dent in the quantity of inflation outstanding.
Contracting inflation = contracting government
Absence of inflation = government bankruptcy i.e. = death of government
Of course, there is absolutely nothing morally wrong in walking away from a mortgage. A mortgage is not money you have borrowed from a friend as a favor at zero interest. A mortgage is not a favor a bank is doing you.
A MORTGAGE IS A CONTRACTUAL AGREEMENT – IT IS A FINANCIAL TRANSACTION
If you bought a Rolls Royce and then realized you could not afford the gasoline consumption or the maintenance on the vehicle, would you not sell it? If you were unable to sell it, you’d give it back to the bank. Would you feel guilty? Sorry maybe, but would you feel guilty?
If you had a fleet of 100 trucks and then business conditions turned down so that you would only need 50 trucks to operate in the new environment, would you not sell half the fleet to maintain profitability? If you were unable to sell the trucks, would you not hand them over to the bank that guaranteed loaned you the money to purchase those trucks? And if cutting your fleet in half didn’t help and you had to go into receivership, would you feel guilty?
A household is not different than a commercial company. A household must be able to make a profit to survive. THERE IS NOTHING MORALLY WRONG IN WALKING AWAY FROM A MORTGAGE. A MORTGAGE IS A FINANCIAL TRANSACTION. The mortgage is guaranteed by the property itself and/or collateral. You walk away and the banks keeps the house. No problem with that.
If the banks however made a mistake in assessing the value of the home when it first extended a loan to you, that was the mistake of the bank. It is their job to assess collateral properly. If they bungle things up, the bank might go into receivership and they will be taken over by another stronger bank.
It is an established fact today that our respective governments have abandoned any pretense of morality. Why should people feel guilty by making a financial decision to ensure their own survival?
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