Good article on bezzle that is running wild in the global economies and how it artificially inflates GDP. Makes it seem that GDP is de carbonizing which isn’t true. Just a phony economy.
Residential real estate in the US has a value of about $57 trillion. To afford the average home you need an income of about $116,000. Unfortunately the average income in the US is $67,000.
Which makes housing at nosebleed unaffordable records.
Right now nobody can afford to sell and trade their 3% mortgage for a new 7% mortgage. Not at the current average home price of $420,000 So many are stuck where they currently are.
I think we already know net energy has peaked. Even though the concept is hard to measure. But when the actual physical supply of oil starts it’s inevitable average yearly decline. Debts are going to be defaulted on everywhere you look and prices are going to fall.
This is roughly what it looks like:
Rate Range % of Outstanding Mortgages Estimated Outstanding Debt (USD)
Below 3% 22.2% ~$2.80 trillion
3% to 4% 35.9% ~$4.53 trillion
4% to 5% 18.9% ~$2.38 trillion
5% to 6% 9.7% ~$1.22 trillion
6% > 13.2% ~$1.67 trillion
Total 100% ~$12.61 trillion
A lot of older people that own their homes outright in the $57 trillion figure. At some point these people will liquidate their assets to the next generation.
All the assets will eventually be sold to the next generation. Which means a lot more new loans will need to be created. And a lot of the homes that older people own outright were built in the 60’s and 70’s and need constant maintenance.
I think the boomers will have a hard time extracting the wealth out of their assets to pay for retirement. High interest rates and costly repairs are just part of the problem.
As oil production shrinks. The ability to pay for these high price assets by the gen xer’s and millennials will be strained to put it mildly.
Banks will have to be willing to finance all this in order for the wealth to be extracted.
There is paper wealth. Where on paper this is what assets are worth. Most paper wealth will never be realized. Not when the energy supply used to repay debt isn’t growing or is shrinking.
We aren’t as wealthy as our asset values say we are.
As the ability to repay debt gets gutted. Wealth and value will simply disappear.
>> When John Mills wrote more than 150 years ago that “panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works,” he was effectively writing about the creation and subsequent elimination of the bezzle within a credit cycle.
<<>> Why the Bezzle Matters to Economics:
Minsky argued that one of the reasons mainstream economics seemed to do such a poor job of explaining modern economies was a tendency among economists to ignore money, banks, and balance sheet effects. But these elements should correctly be placed at the heart of economic analysis, he argued, and this meant, among other things, understanding how balance sheets created and destroyed value and how they lined up systemic procyclical and countercyclical tendencies across an economy.
<<
https://www.dailymail.co.uk/news/article-14622137/Trump-golden-dome-missile-plan-revealed.html
Trump to build Golden Dome missile shield with Elon Musks SpaceX..
Isn’t this similar to the Star Wars program from Reagan.
This seems like a conflict of interest.
Reposting from last thread.
Golden Dome was probably Trump’s second choice for a name after the Trump Dome
His Dome will be bigger than Israel’s Dome. Just like his missile is bigger than Kim Jong Un’s missile.
Marco Rubio read 1984 and thought “Hold my banana daiquiri”?
https://www.dailymail.co.uk/news/article-14628017/how-trump-win-bougainville-america-deal.html
Trump wants to seize tropical island full of GOLD!
Mr. Trump is on FIRE!!!!!!
This is BIGLY!
Good article on bezzle that is running wild in the global economies and how it artificially inflates GDP. Makes it seem that GDP is de carbonizing which isn’t true. Just a phony economy.
https://carnegieendowment.org/china-financial-markets/2021/08/why-the-bezzle-matters-to-the-economy?lang=en
Residential real estate in the US has a value of about $57 trillion. To afford the average home you need an income of about $116,000. Unfortunately the average income in the US is $67,000.
Which makes housing at nosebleed unaffordable records.
Right now nobody can afford to sell and trade their 3% mortgage for a new 7% mortgage. Not at the current average home price of $420,000 So many are stuck where they currently are.
I think we already know net energy has peaked. Even though the concept is hard to measure. But when the actual physical supply of oil starts it’s inevitable average yearly decline. Debts are going to be defaulted on everywhere you look and prices are going to fall.
This is roughly what it looks like:
Rate Range % of Outstanding Mortgages Estimated Outstanding Debt (USD)
Below 3% 22.2% ~$2.80 trillion
3% to 4% 35.9% ~$4.53 trillion
4% to 5% 18.9% ~$2.38 trillion
5% to 6% 9.7% ~$1.22 trillion
6% > 13.2% ~$1.67 trillion
Total 100% ~$12.61 trillion
Formatting is difficult….
A lot of older people that own their homes outright in the $57 trillion figure. At some point these people will liquidate their assets to the next generation.
All the assets will eventually be sold to the next generation. Which means a lot more new loans will need to be created. And a lot of the homes that older people own outright were built in the 60’s and 70’s and need constant maintenance.
I think the boomers will have a hard time extracting the wealth out of their assets to pay for retirement. High interest rates and costly repairs are just part of the problem.
As oil production shrinks. The ability to pay for these high price assets by the gen xer’s and millennials will be strained to put it mildly.
Banks will have to be willing to finance all this in order for the wealth to be extracted.
There is paper wealth. Where on paper this is what assets are worth. Most paper wealth will never be realized. Not when the energy supply used to repay debt isn’t growing or is shrinking.
We aren’t as wealthy as our asset values say we are.
As the ability to repay debt gets gutted. Wealth and value will simply disappear.
I learnt a new word today: bezzle.
https://carnegieendowment.org/china-financial-markets/2021/08/why-the-bezzle-matters-to-the-economy?lang=en
>> When John Mills wrote more than 150 years ago that “panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works,” he was effectively writing about the creation and subsequent elimination of the bezzle within a credit cycle.
<<>> Why the Bezzle Matters to Economics:
Minsky argued that one of the reasons mainstream economics seemed to do such a poor job of explaining modern economies was a tendency among economists to ignore money, banks, and balance sheet effects. But these elements should correctly be placed at the heart of economic analysis, he argued, and this meant, among other things, understanding how balance sheets created and destroyed value and how they lined up systemic procyclical and countercyclical tendencies across an economy.
<<